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URL:  http://boards.fool.com/gte-north8217s-6738217s-of-821628-30585716.aspx

Subject:  GTE North’s 6.73’s of ‘28 Date:  3/12/2013  9:45 AM
Author:  globalist2013 Number:  34825 of 35271

GTE North’s 6.73’s of ’28 is a bond I missed noticing in a timely manner. http://cxa.gtm.idmanagedsolutions.com/finra/BondCenter/BondD... So this morning, the question was whether to chase prices. The maturity is way the hell out there. But an investor would end up net-positive (with an adjusted YTM of 0.3%) when the discounting is done that assumes customary tax-rates and a 5% inflation rate.

However, the underlying company (FTR) seems to be in trouble. The short-ratio is 21.3%. The div-payout ratio is an unsustainable 308%. If borrowings are backed out of ‘current-assets’, the company isn’t covering ‘current-expenses’ from ‘current-revenues’. LT debt and total liabilities are increasing. The company has a negative net-worth. In short, the company looks like a short and not someone to lend money to. (IMHO, ‘natch)

So I backed away, which is what I’ve been doing a lot of these days when I dig into what's being offered. At much lower prices, I'd accept the risks, but not at where most bonds now are. It's not fun not being able to put cash to work. But it's definitely part of game. If you call yourself a "value investor", then you sit on your hands when things get over-bought, and you don't chase prices.

Charlie
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