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Something that may be of interest to folks... A "Blue Rhino" issue from the LP that is not affected by the company's BK, i.e. FERRELLGAS LP 6.50% of 05/01/2021. Not much time left to maturity so this is quick one. This should be pretty rock-solid as I believe outside of the failed acquisition the business is not doing that badly but the YTM is 12-14% depending on the bond desk which is surprisingly high.

Other Lerrellgas LP (as opposed to Ferrellgas Partner LP) bonds may be worth looking at also.
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Stas,

I'm seeing an inverted yield-curve, a nearly infallible signal of an immanent BK. Be careful.
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I wonder if this LP will file just as Ferrellgas Partners LP did? I don't think so as the BK deal was swiftly done. But there may be more to it. Or perhaps traders are just confused? From my perspective, none of this company's issues are worth opening a large position in. Perhaps none at all. But maybe a small one. I'll probably keep an eye on Blue and if I remember to follow up, I'll post again with developments.
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"...Or perhaps traders are just confused?"

Stas,

It's useful to think about 'markets' as being made up of four groups: the 'fast' money, the 'smart' money, the 'big' money, and the 'dumb' money. The four enter/exit sequentially. The 'fast' money are the professional traders. They're constantly probing, constantly trying to exploit fleeting pricing anomalies. When wrong, they'll reverse on a dime. They used to be humans. Today, increasingly, they're 'algos'. Tough to compete against, but not impossible.

The 'smart' money is the 'early' money. They've done their homework. They'll spot trends before anyone else and get in modestly, typically adding when they are proven correct.

Once it becomes obvious that a trend is underway, the big money --the institutionals-- pile in big time, and the media begin reporting what is already obvious to those who engage markets, rather than just talk about them from the sidelines. When their yammering reaches the uninformed, they pile also, buying the top from the smart money who now is exiting and looking for the next opportunity.

So, with respect to Ferrellgas, who's pricing those bonds, i.e., who is your counter-party to the trade? and which of you is correct? If you're going to mess with spec-grade debt --and I've bought a lot of it over the years-- you've gotta be right more often than not if you're making equal-sized bets, or you've gotta be right about the big stuff.

Personally --and this is just me, though Linda Raschke, one of the world's best traders, argues the same. It's all but impossible to know which trades will work and which won't. So size positions in such a way that even a series of losing ones won't get you thrown out of the game. (Talib explains this strategy fuller in his books.)

Why do yield-curves invert? Because traders are beginning to price the bonds according to their estimated workout value, not their value if held to maturity in whatever interest-rate and inflation-rate environment is expected to prevail. In the case of Ferrellgas, are they right? Who knows? So do your due-diligence and size a position properly, which might mean 2 bonds, 5 bonds, or 10 according to your account size, or none at all. Then its "wash, rinse, repeat" as you dig into the next opportunity.

Arindam
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Stas,

I'll make this quick, because no one should buy --or not buy-- merely on the basis off someone else's opinion. I think FGPRQ's 6.5's of '21 suck.

Current ask is 99.1 (min 5) for a YTM of roughly 10%. But when you pull T&S, you'll see it's amateur hour in terms of trade sizes. That's worrisome. Next, pull the Moody's report and think about what they're saying. (Scary stuff.) Next, pull their balance sheet and look at trends and "the bottom line", which is negative and getting worse. Lastly, think about the overall economic environment in which we find ourselves and in which the company has to turn itself around. (Yellen's printing won't keep the Ponzi scheme going.)

My bet --which doesn't have to be yours-- is the possible rewards of buying their debt don't compensate for the risks that have to be taken. (Again, IMHO, 'natch.) But if you do want to make a bet, trade the common, because the payoffs are likely to be the same, and the entry requirements are a whole lot less.

In other words, taking a position in their 6.5's means putting around $5k at risk to try to grab roughly one-quarter of the coupon, or a gain of just 1-5/%. That sucks. Whereas the common, now at $0.55, was trading at $0.30 about a week ago.

Arindam
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Stas,

Scratch trying to trade the common. The opportunity is gone. Do notice the obvious insider trading that occurred ahead of announcing BK.
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I ruled out the common which is probably delisted from exchanges or has a modified ticker due to price being so low. Probably been a penny stock for some time and thus violated exchange rules. Not sure how many tickers they have due to the structure. Could be a couple.

The plethora of bonds when looking the company up on FINRA's Web site is interesting. There is FG Partners LP and FG LP. FG LP (OpCo) technically did not BK. Partners did. From the reading I've done so far, I think they are trying to refinance and pay off some of the outstanding OpCo notes of '21 through '25 with that funding. Now, will they be able to secure $500 million as that is how much is outstanding on 6.5's of 2021? Yikes. I don't know. But there is so much hunger for yield and so much cash on sidelines... they just might and maybe even at better rates!

As to the business, there are several segments with the Blue Rhino business being probably relatively small. Will need to see about that. I think they have a strong position in the market and the areas where they play should not be affected significantly by the pandemic but, again, I'll need to do more digging before opening up a substantial position. Those that got in when the '21 was trading at 70c on the $1 last summer are looking good right now though - that's for sure! But lots of things were trading at a discount then so...
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Stas,

For any issuer, what's listed by FINRA --and what's actually available to retail investors-- are different. The big boys (and accredited investors) have access to issues we never see traded. Looking to see how much debt they've issued can be useful. But far more useful are price charts and how the bonds are being bid.

The Moody's report covers the issues you raise about them trying to refinance. Will they make it? Who knows, because now you're into trying to forecast the future of a stressed, overly-indebted economy.

Arindam
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Right, some of the FG issues FINRA lists are not even trading any more. The FG Partners LP bonds are probably in default or something like that ... I'm not exactly sure how the BK is progressing. But at the end of the day, I don't expect FG or any company in a similar financial position to have the funds to repay a $500MM note from earnings. :) They would have to find a way to repay whether via a massive loan or via issuing additional bonds or some other round of financing. I'll keep an eye on it as it's an interesting case (to me) as I am not very familiar with situations where one LP goes BK but another doesn't.
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Stas,

If the situation with Ferrellgas interests you, then it interests you. But I think you're wasting your time, because their financials are so bad compared to other, more obvious situations. OTOH, Simply Wall Street, a fundie site I've recently stumbled onto, says of them:

Stable Cash Runway: Whilst unprofitable FGPR.Q has sufficient cash runway for more than 3 years if it maintains its current positive free cash flow level.
Forecast Cash Runway: FGPR.Q is unprofitable but has sufficient cash runway for more than 3 years, even with free cash flow being positive and shrinking by 53.6% per year.


So, taking a position in their debt depends on being reasonably sure you've done your homework correctly. However, when I see how their debt is being traded, it looks to me like just yield-hungry amateurs are bidding on it, hoping they've found a lottery ticket. So bump up to the single B's in your scans and take a look around.

(Again, IMHO 'natch)
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I'm not planning on spending a whole lot more time researching FG but will check on the company from time to time to see how BK is progressing. I am currently of the opinion that financials are far from solid, the company may be positive EBITDA but still have plenty of issues to resolve and I'm not sure where the 3 year run way is coming from specifically BUT I bet FG will find funding given how many fund managers/banks/etc are starving for yield. I'm sure the interest rate will be way up there but I in the end I imagine they will get a mix of bonds, asset-based lines of credit, etc to pay off 2021 debt. We'll see.

And certainly, there are plenty of better places to park cash so onward...
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Stas,

You wrote: "And certainly, there are plenty of better places to park cash so onward..."

If you truly believe that is the case, why are you tracking Ferrellgas, hoping they turn things around? Investing in spec-grade requires a clear head and a brutal ruthlessly when the "facts" are messy, as they certainly are with Ferrellgas. 'Woulda/coulda/shoulda' doesn't spend well at the grocery store or gas pump, and 'hope' --that things will somehow work out-- is NOT a sound investment strategy.

As traders would say, "Better a missed opportunity than a realized loss."

It isn't just Ferrellgas that's in trouble financially. The whole energy complex is under stress and likely to get worse, for reasons websites that track commodities lay out. Do yourself a favor. Put trying to turn a profit on Ferrellgas's debt out of your mind, so you can look with fresh eyes at other opportunities.

Lastly, a quibble about semantics. Investing in spec-grade debt is NOT the equivalent to "parking cash". 'Cash' has a single risk, 'inflation'. Spec-grade debt adds a more devastating one, namely, 'permanent impairment of capital'. Back in the "good, old days", workouts from BKs sometimes offered decent money. In fact, once I was made whole (World Airlines) and on a couple (e.g., K-mart) I turned a profit. But by and large, in these days of company over-indebtedness, you do not want money tied up in BKs, only to end up with cents on the dollar, or nothing at all.

Arindam
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I am tracking FG mostly as it is of interest due to the legal structure and BK proceedings as I mentioned earlier.

And yes, the "parking cash" is perhaps not the best way to put it but my excuse is I'm not native to the English language. :) Another set of opportunities I'm tracking is GEO, both the common and bonds.
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"Another set of opportunities I'm tracking is GEO, both the common and bonds."

https://seekingalpha.com/article/4395191-11-yield-bonds-from...

A SeekingAlpha article on the GEO play from Dec.

It seems a little intriguing as some of the recent drop is 'political' in that there is a belief that the new administration will not be outsourcing jails and jail management, but I imagine they won't made be building new ones either, so I suspect the impact will be smaller.
Have not delved in to the actual financial picture yet to see how viable they will be from a balance sheet perspective.
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Neuro,

Thanks for posting a link to the article, which makes a very compelling case for buying GEO's debt.
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FG's entity that was in court eventually emerged from BK. I don't think any of FG's units remain in BK status. The company quickly called 6.5's of '21. Yes, the issue that was supposed to mature 5/1 will be paid off 4/5. I guess they are "saving" a few weeks of interest although I'm sure there was new debt deals signed that these "savings" will go towards. Now I'm on to PPL, PBF, GEO and some other issuers...
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Stas,

Congrats on seeing an opportunity and having the courage to act on it.
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