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Strategies & Market Trends : Value Investing

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To: Spekulatius who wrote (32399)	10/10/2008 12:02:40 AM
From: Spekulatius	Read Replies (1) of 78714

re Income securities. Jurgis has reported some bond purchases here. i sometimes wonder if income securities are where the real bargains are nowadays. For example I purchased some JBS @11.5$ (of course I am down on that purchase to they trade at 10.5%$). This is a JCP preferred yielding 7% on 25$, so it pays 1.75$ annually. So right now it's trading at a 16%+ yield at 42% on the $. Also JCP is a retailer( yuck) their balance sheet looks relatively healthy and they are still making money. it does not look as they are going bankrupt anytime soon. So why would I want to own JCP stock if I can own a 16$ security with better downside protection trading for 42c on the $?. if JCP's prospect improve this preferred could trade at a 10% yield=17.5$ without any stretch of imagination. It seems nuts but JBS is not alone out there - there are many preferreds and bonds trading at levels that almost seem surreal. Some if it is the Fannie/Freddie effect where the preferred go wiped out because the government backstop did not apply to them but with nonfinancials we have some hard assets backing up the debt so a total wipeout is quite unlikely.

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