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Strategies & Market Trends : Value Investing

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From: E_K_S	12/14/2014 1:28:23 PM
	3 Recommendations Recommended By Grommit Mattyice Spekulatius Read Replies (1) of 78644

Value in E&P distressed Debt? I have been using this chart to begin my research. THe FINRA Web site is an excellent place to get prices on company's debt. finra-markets.morningstar.com With Schwab, you have to go through their bond desk to get your quote. Their bond traders will put your bid out (typically sending out inquiries and/or by phone). Seems like an odd way to buy the debt but the market is not real "fluid" and there are huge spreads especially w/ the recent drop in oil. If you do not get the quote you want for size and/or rate, you have them call out again the next day. The rating agencies are behind in updating their current ratings so the market is discounting many of these issues way too much. That's the value opportunity. Schwab charges $1.00 per $1,000 bond w/ a minimum fee of $10.00. You typically do not trade these issues but my plan is to hold to maturity and/or when they are called. Also, one needs to review the original details of when the specific issued was priced to determine the "call" provisions, how it is priced and the frequency of re-pricing. With my SVU Buy they had a "pay in-whole" provision when called. Other issues are repriced every 6 months and in all cases are called at or above PAR. The research requires a bit more due diligence but the value(s) are there. Liquidity is also much better than many of the small S&L's and/or mortgage debt issues during the credit freeze of 2007. I expect the E&P debt to get quite active in the next 10 days as oil prices hit new five year lows. "This $550 Billion Mania Ends Badly," Energy Companies Are "Shut Out Of The Credit Market" Markets tend to over react so risk/reward is low based on the potential value in the underlining assets . At/when assets become ill-liquid and/or banks will not lend, the shrewd investor w/ cash can by assets for pennies on the dollar. Crude Crash Set To Continue After Arab Emirates Hint $40 Oil Coming Next ------------------------------------------------------------------------------ I look forward to these opportunities as they do not happen that often in the cycle. The time is not to panic but to find the most valuable assets and buy some. EKS

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