The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Bonds & Fixed Income Investments

URL:  http://boards.fool.com/gibraltar8217s-88217s-of-821615-30557614.aspx

Subject:  Gibraltar’s 8’s of ‘15 Date:  2/22/2013  9:33 PM
Author:  globalist2013 Number:  34802 of 35930

Gibraltar Industries [Stock ticker: ROCK] is calling their 8’s of ’15. That means it’s time to do another stock versus bond retrospective.

I put on the position 05/19/09 at 64.095, for a projected CY of 12.5%, and a projected YTM of 17.4%, which is decent money for B2/B+ bond position. Due the 03/04/13 call at par, my achieved CY remains the same 12.5%. But my achieved YTM bumps to 22.6%, which, again, is merely decent money for a B2/B+ position that has been bought in a timely manner. How would the buyer of the common have done over the same holding-period?

On 05/19/09, ROCK closed at $7.92 (after opening at $7.83 and tagging $8.15 for the day’s high and $7.771 for the day’s low). It cannot yet be known where ROCK will close on 03/04/13. But let’s project the current trend, and let’s make a guess that $18.17 (or no higher than previous resistance) would be not unreasonable. So, taking a compound root equal to the holding-period in years of the fraction obtaining by dividing the exit price by the entry price suggests an annualized gain of 24.5%, or pretty much a wash with buying the bond from the viewpoint of initial dollars put at risk versus total dollars returned due to eac