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Author: trader2012 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35392  
Subject: Howard: Comparing Portfolios, Again Date: 2/29/2012 4:08 PM
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Howard,

While we’ve swapping info on each other’s portfolio, here is a summary of my YTD buying:

25 new positions ($67k face), bought at an average cost of 84.932, with an average CY of 8.7%, and an average YTM of 14.3%. Below is a more detailed breakdown.

Price Amt CY YTM Rating
79.450 5000 6.5% 8.0% Aa3
98.845 1000 8.0% 8.1% Baa1
86.019 1000 5.2% 11.0% Ba2
104.174 5000 6.6% 6.0% Ba2
97.469 5000 7.4% 7.8% Ba3
92.600 1000 7.8% 9.3% Ba3
79.500 1000 7.5% 12.7% Ba3
92.407 1000 7.0% 9.1% B1
100.199 5000 7.5% 7.4% B1
96.375 1000 7.9% 8.6% B1
76.219 5000 9.0% 11.2% B2
94.815 3000 7.8% 8.7% B3
72.950 1000 10.8% 17.0% B3
92.219 5000 9.8% 13.0% B3
107.000 1000 10.7% 9.4% B3
66.950 5000 13.1% 23.7% Caa1
61.505 1000 11.2% 25.5% Caa1
55.500 1000 12.2% 18.6% Caa1
100.000 1000 8.5% 8.5% Caa2
30.750 1000 38.6% 134.2% Caa3
73.719 5000 11.5% 14.5% NR
66.365 3000 4.5% 71.4% NR
101.250 1000 9.9% 9.4% NR
70.349 5000 7.1% 22.1% NR
109.493 3000 11.9% 10.1% NR

There doesn’t seem to be any consistency in the list. But appearances are deceiving. In each case, I bought what seemed worth buying, letting the price be what it was, as well as factors like CY and YTM. For sure, I’m going to lose some of them to defaults and minimal recoveries. But that just goes with the territory, as you know. My guess is that in a worst-case scenario, I’d end up with a scratch on this group of purchases, i.e., something in the range of 8%-10% (which becomes a zero return after taxes and inflation, hence a scratch), but which is good enough for the girls I go dancing with.

Charlie
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Author: howardgt One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33757 of 35392
Subject: Re: Howard: Comparing Portfolios, Again Date: 2/29/2012 4:28 PM
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I'm just a baby compared to you. I made 7 purchases YTD comprising 6 issues (I took 2 bites at RR Donnelley). I'm not on my primary computer now, so I don't have the details. Tonight I do my month-end MTM, so I'll post a summary sometime tomorrow evening.

Howard

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Author: howardgt One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 33779 of 35392
Subject: Re: Howard: Comparing Portfolios, Again Date: 3/2/2012 6:27 AM
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Charlie,

I couldn’t make too much out of your list because you omitted Yrs-to-Mat. Yields are sort of meaningless to me without some sort of duration. I guess I could’ve figured it out using the difference between CY and YTM against Price, but I didn’t feel in the puzzle mood just now :). Anyway, here is my list as of Mar 1 (bought another today).

8 new positions ($18k face), bought at an average cost of 81.54, with average Yrs-to-Mat of 9.6 yrs, rating of B1/BB, CY of 10.1%, and YTM of 13.02%.


Yrs to Mat price face CY YTM rating


7.0 78.417 3000 10.4 12.86 B3
7.1 78.467 3000 10.0 12.50 B2
2.0 65.400 2000 15.7 34.79 Caa2
7.2 83.585 2000 8.1 9.98 Ba3
9.1 93.525 2000 9.5 9.96 Ba1
16.0 71.800 2000 9.4 10.38 Wr
9.1 96.775 2000 9.2 9.40 Ba1
19.2 91.400 2000 10.0 10.15 B3

YTD Tots
9.6 81.54 18000 10.1% 13.02% B1/BB



I seem to be finding reasonable value (for this interest rate environment anyway). The only thing is that I sometimes have to go out a bit longer in duration than I would like. But when I collect a CY of 10%, I’m prepared to do it. As I’ve said before, if I end up with a YTM anywhere close to 10%, then I’m happy. That leaves me 3%/year for defaults less recovery. In a muddle along economy I think that’s doable.

No time now to answer your other post about charging my bond-risk to all classes in my portfolio. I may explain later, but I purposely “don’t do that”. I got buckets in buckets, all managed separately. There is a reason for my madness, but no time to explain now. Got to get some sleep before I get ready for another (non-financial) project tomorrow.

Howard

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