Hi Raymond, Following up to your discussion with Patekoby. Could not resist my second helping of SI over this lazy and meandering weekend. There should be plenty of such weekends in the lead-up to the holidays and lead-down to the business cycles. I am ready, tins of various paste and boxes of crackers on the coffee table, and that wondrous American invention, milk and coffee in a glass bottle at the trigger finger.
Here is the synopsis of a gamble allocated in the absence of information and/or intelligence, of the thinking sort, as is the definition of “gamble”.
Message 16198243
August 11th, 2001
“… Maurice may be happy to learn that I should (I will confirm after I have done so) be taking a speculative long position in Global Crossing, given that the screaming cries in that bloodied arena is hoarse. See, I am not all doom and gloom, and hardly ever whine :0) “
Message 16211698
August 14th, 2001
“…Hong Kong continues to deflate, and I believe only ahead of the US. I have converted still more cash to Euro (I liked my experience so far with Swiss Francs) and I have got a bid for Global Crossing security of slightly more exotic flavor than common shares, as well as a bid for some NTL (Britain based cable) security with a relatively high yield. I am simply walking through the bloodied and whimpering arena, kicking at all the bodies to see which ones might escape from the trip to money heaven and eventually head for a journey to wealth paradise.”
Message 16213171
August 15th, 2001
“Hi Mucho Maas, I am hoping to do the GX 7% preferred yielding 21% with cumulative rights, just a bit, and if executed, I can say to Maurice I am cutting in front of his line to put the touch on what was his money:0)
My bond friend says it is distressed and thus stay away. I do not know one way or another but believe GX will be a survivor (maybe not the common shareholder) by talking to my neighbor who is the head of a US telco in Asia. Spec size is one expensive platinum watch worth.
I am 'diversifying' with an equal spec on NTL.”
Message 16216838
August 15th, 2001
“Hi Jay, Oops, broker just called. Cash went down 55 basis points and bond went up by equal amount due to execution on GX, not the convertible but the 8.7% Aug 2007 maturity Global Crossing Senior unsecured bond at 70. Now I know why they call it distressed bonds, for I feel exactly that:0)
Maurice, I am ahead of you now! First dibs on the tele-carcass ribs! “
Message 16239222
August 21st, 2001
“… I think "hold fire" is the game theory thing to do.
To complement my position in Global Crossing debt, today I got execution on a tranche of British cable TV company (MSFT/Gates has a chunk of this near-death company) NTL 2008 6.75% debt for USD 53.50 today. Little by cautious little, Jay moves forward, weapons at ready:0) “
Message 16272397
August 28th, 2001
“… Most of my bonds were purchased during the Asian Financial Crisis (Bangkok Bank, Swire Pacific, Shanghai Industrial, and a Asian Tiger Bond fund, all USD denominated and yielding between 13-28% on cost), and recently I bought a bit of Global Crossing and NTL distressed debt securities, just to keep in practice.
I believe the cult of equity will go quiescent in a moment, slipping below the waves, and those without pre-positioned scuba gear down the blue abyss may not emerge again, and those weighed down by unsustainable debt and held down by deflating asset may not enjoy the excursion.”
Message 16273387
August 29th, 2001
“My Global Crossing debt, bought a few days ago at 0.7 on the dollar, just went to 0.61 on the dollar. That was fun, quick, and 'not' painful.”
Message 16304934
September 5th, 2001
“<<Not quite. Jay's Global Crossing bonds fell more than 10% since he bought them a few days ago>>
Yup, I tossed two grenades into the dark basement where there was still some whispering, and one got tossed back in my face.”
Message 16440008
October 1st, 2001
“Hi carranza2, yes, I did buy GX August 2007 8.7% senior debt at 0.70 cents on the dollar and watched it drop to 0.51 cents within three weeks after the initial foray into the minefield. This is reminding me so much of my 1998 ‘buy the bargains’ emerging market financial storm speculation – didn’t matter what I bought or when I bought it, the next move in the bargain is another 20% drop, followed by yet one more.
So, buy slowly, broadly, in allocation size that does not kill or maim, and given the number of ‘bargains’ and ‘tempting treats’, do not bother with averaging down; just buy something that will deliver on the next 20% decline, it is easy:0)
The pain goes away after a while, as the numbing envelops all sensitive spots, and soon, fever, delirium, thoughts of redemption and forgiveness. Finally, seeing the light.”
siliconinvestor.com
Private
October 15th, 2001
… My allocation position, unlike that of Abby Jo Cohen, has not changed appreciably. I had tripled my earlier position in GX 2007 8.75% bonds the day after Columbus Day. My first tranche was purchased at 70 cents on the dollar about three weeks earlier, and the post-Columbus Day second tranche (tripling) was done at 19.5 cents on the dollar. I do not planned to average down again”
I expect the company to survive, given they have real revenue, true assets, and that if they really are in danger of slipping below the waves, someone will buy up their bonds for them, do harm to all the equity holders, raid the management and my bonds will convert to equity after much acrimony and litigation.
It is a manageable gamble, accounting for a tiny portion of NAV, as a grenade tossed into the dark basement ... yup, the combatants within are still able to toss them back.
Chugs, Jay |
