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URL:  http://boards.fool.com/blacktree-that-piece-of-sht-bond-mead-johnsons-30399738.aspx

Subject:  Re: mead johnson nutrition 2019 Date:  11/26/2012  2:28 PM
Author:  trader2012 Number:  34527 of 35345

Blacktree,

That piece of sh*t bond, Mead Johnson's 5.9's of '39, is even worse than I thought. Pull its quarterly balance-sheets.

(1) That company has no tangible net-worth.
(2) They can't meet current expenses from current revenues.
(3) In the last three years, they've had to come into the market three times to borrow, and they have done so at increasingly higher rates.

In other words, the cash on their books is from borrowing, not revenues. Next year, when they again need money, what rate will they have to pay, and how will they be able to service that debt? When that company files Chapter 11 --and they will-- what will be the recovery-rate for bond-holders? A good bet is zero, or at least something a very long ways from an entry price of 127. In short, that bond has zero upside and 127 points of downside. That's gambling, not investing.

Why did their parent company spin them off? Because it wanted to divest itself of the anticipated problems now surfacing. That is a piece of sh*t company nobody should lend money to by buying their bonds. Trade their stock if you are so inclined, and currently, it's a short. Black, you ought to be ashamed of yourself for your sloppy due-diligence. There's sensible, responsible money to be made from buying junk bonds. But Mead Johnson's 5.9's of '39 is classic instance of "No Thank You. I'm not so desperate for yield that I need the highly likely grief that would result".

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Bond investing ain't no different. Think before you buy. "It's far easier to make up a missed opportunity than a realized loss."
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