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B&G Foods Inc. Message Board

  • finle1y finle1y Nov 2, 2009 7:54 AM Flag

    SO WHAT !

    Just so we are clear, I like their products, I hold the IDS, I've traded the thing.

    And now what?

    I bought it in the beginning for the income. I hoped for growth - my original cost is near, but below the current price (timing is everything).

    I'll hang on to the remaining notes, even if I COULD sell them.

    But the common? IDUNNO.

    They have returned about 42% of my original cost as return of capital (with more expected this year - my guess). Except for the ROC, considering the trouble over the past 2 years, it has held up pretty well. The yield is OK, MAYBE the growth prospects are too.

    So, the question?

    As an income investor, I can presently get a tax free muni yield near or equal to the BGS taxable yield. Should I hold? Why should I hold?

    Just lookin' for thots.

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    • Your 9% tax-free muni yield is either using leverage (a la PMF), or is a very risky revenue bond issue (i.e. not backed by the govt). Either way, there is going to be additional risk involved vs. owning straight GO bonds, which *are* safe but which also yield about half of BGS.

      My view is that B&G stock should do relatively OK even if we have a double-dip recession, as long as we don't face a credit crunch like we just had Sept-March. This is a food stock so should be less economically sensitive than the market as a whole. And with the work they've done on their balance sheet recently, its a stronger company than it was a year ago pre-crash.

      I know you said you are an income investor, but a bond isn't going to give you the opportunity for capital appreciation that you'll get here. I sort of view BGS as a bond that also has modest opportunity for capital appreciation.

      • 1 Reply to strum_this
      • strum_this

        Thanks for the thots. I used to go for appreciation/momentum investing. Got my butt kicked when the tech bubble burst, but not so bad... :)

        Like you, I see B&G as a good stock. However, they cut the div. once - .21. to .17. and there is no reason the think they could not just stop paying - I don't think that will happen.

        Leveraged muni funds - PMF - got a bit of that. Also have a bit of govt bonds. Your advise about risk is taken well.

        What fans of any stock fail to see is how easy (think last 18 months) it is for it all go away - ALD, ACAS, FRP...

        I have mostly preferred issued - if bought right you get appreciation and income - :).

        But recently have been looking at CEFs with low leverage and portfolio turnover.

        A guy has to do what a guy has to do.

        Got any investing ideas?

    • I'm afraid of Muni's because states can default.

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