Right on Oliver, and the bonds are now priced for CH11 and trading into the 30s which is inexplicably low given book. If the co. is buying them back hand over fist w/the divi $ they could save LOTS of interest payments and book some $erious gains which should last til hedges run dry.
It's working as bonds now @.40, they were $.8 in April; when WTI was $60. The KKR Sampson Ch11 was a real eyeopener so private equity will be cautious, but opportunistic...
Yet the Bonds are priced for Ch11 @.40, which is telling given they were $.8 in April when WTI was $60.
KKR's Samson Resources CH11 was a wake up call and may pose as a deterent to other private equity deals. OTOH, The discount may present value. The Bonds are NOT callable @$.4. Any debt bought at that price would have to be on the secondary. Any assumption of bond debt or refi would have to be @par.
.60, more like .40s! Co could book some BIG gains by pouring the divi $ into bond buyback & int savings on bonds.
Indeed Ron, and the Bonds are still priced for CH11, book value recovery. They are the BEST indicator of a co's health. Stock is purely a trade which as seen time & time again, unless things improve, common gets toast.
Toad, they didn't buy up cheap shares, they bought cheap bonds. They default on bonds, GAME OVER, TOAST!
Your purported gain doesn't determine whether a hedgie will bear raid, but the burden/loss of paying a quarterly divi if you stay short does.
Millm, stock has moved up double digis and bonds continue their slide. Bonds trading with the WTI increase. Bonds based on book & liquidation value if co croaks.
Those bonds were $.85 in April when oil was $60 and there was a Divi and NO bond buyback. Capice? And the bonds BARELY moved today! Still in the 40's...
You don't get it San Jose. Hedgies LOVE to bear raid stocks who DON'T have the institutional & fund support & $5 price like TSLA, AMZN, GOOG.
Which is often the deterent to bear raiding a stock
The unit suffered losses on its position in Verso Corp., a paper producer whose bonds lost two-thirds of their value this year, as well as on debt of energy companies, said the people, who asked not to be named discussing the information because it isn’t public.
Alas, yes, this fund had similar performance in '08 but did recover. It's a bumpy road which tests your risk tolerance. EVBAX with fmr LSBRX staff has done lousy ytd as well. MGFX seems to be a bit smoother based on it's holdings, albeit same mngr.
Ronv, Distressed debt funds (who are often the bulk of buyers) buy based on book & future value of earnings as a prediction for liquidation value. OTOH, these bonds (and the INSANE spreads) are presently trading based on WTI. The '19s were @85 in April when WTI was $66. Hence, Mark to market in this scenario may NOT be a true indicator...
Rock star? Um, not based on the recent performance and/or expense ration.... Dow nearly -7% ytd as of 8.24. Hope it improves soon...
Article made NO mention of Linn cutting it's divi for $450 mil in annual savings. Analyst also said, We don't follow the company financials directly.