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Subject: Re: reynolds group	Date: 11/21/2012 12:56 PM
Author: trader2012	Number: 34514 of 34984
Correction: At ETrade, min-purchases in the book on the 8.25's was just amended to include 5's and 10's. Thus, by 'paying up', a smaller lot could be bought. But the question still to be answered is whether their debt should be bought at all. This isn't classic, Ben Graham-style "value-investing". It's new-issue, junk-bond investing, which is an entirely different game. Take at look at their yield-curve. It is flat, flat, flat, offering a max YTM of about 8.5%. On an after-taxes, after-inflation basis, the situation is even worse. Cpn Due AdjYTM 8.500 05/15/18 1.08% 9.000 04/15/19 1.30% 7.875 08/15/19 -0.61% 9.875 08/15/19 1.47% <<==tactically, a better buy than the 8.25's of '21 8.250 02/15/21 1.37% Do you really want to put capital at risk that offers, at best, a real gain of 1.47%? A couple of quick scalps would offer more than that, and the rest of the year one could sit in cash. Always, always, always, in the investing/trading game, this question has to be answered: How much reward is being offered for how much risk?* I'd be willing to bet that Reynolds will survive. But I'm not wiling to lend them money at current prices.
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