No. of Recommendations: 5
Just to add to your analysis Scott, (I just read it)

I got in at about five dollars per share on the sbckp and sbcko.

with an annual coupon of 1.75 on the SBCKP, and a discount rate of 25%, six years of dividend payments would mean you have exceeded your hurdle rate of 25% annual returns. WITHOUT ANY RESIDUAL VALUE or further payments.

in fact, three years of payments are better than a breakeven at $5.25

So when people tout inflation risk as a reason not to own long bonds, this is true, when you pay par.

at 20 cents on the dollar, inflation risk seems well accounted for.

I think it is extremely unlikely that these bonds will default, as the inventory value of sears holdings alone exceeds all long term obligations (leases and debt and pension obligations) of sears holdings.

would Lampert rather sell off a hundred stores or so than default on the debt and be forced into bankruptcy?

most likely.

time will tell, and risk is always more two sided than I think.
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