Take a look at Inmet's 7.5's of '21.Issuance of $500 million in senior unsecured notesOn December 18, 2012, we issued $500 million in senior unsecured notes, the proceeds of which will be used to fund development of Cobre Panama. The notes bear a coupon rate of interest of 7.5 percent and mature on June 1, 2021. ir.inmetmining.com/press-releases/inmet-announces-fourth-qua...Inmet has tremendous assets and a rock solid balance sheet.A 6.96% current yield and slightly lower YTFC, which 12/16, so almost 4 years of call protection.http://cxa.gtm.idmanagedsolutions.com/finra/BondCenter/BondD...I think this bond is mispriced based on Inmet's creditworthiness, character, and collateral.
LONGREITS, The bond is (1) Not yet trading in retail quantities. (See link below.) (2) Not yet available thru E*Trade, Schwab, Fidelity, or Zions Direct as of 5 minutes ago. (3) Won’t offer a real rate of return to maturity even if the trade could be done at the ‘Last Price’ of 107.625 (assuming customary tax-rates on ord-inc and a 5% inflation-rate).(4) The 2016 call is even more adverse (assuming the same assumptions as previously). Once again and as always, 'nominal YTMs' are meaningless unless the investor is deliberating choosing to depreciate his/her purchasing-power. The only thing that matters by way of investment returns is spending power at the grocery store or gas pump. So, other than the fact that the bond can’t be found to buy, and that buying it would lose you money, this is a wonderful opportunity. ROTFL. But you're to be commended for making the effort to call the community's attention to this bond. Practicing one's due-diligence is never a wasted effort. At a much, much lower price this might be a good opportunity. But the bond market hasn't got it wrong. Given the bubble we are still in, the bond is priced in line with its peers, and it should be of no interest to long-term, defensive investors. (IMHO, 'natch) Charlie---------------------http://cxa.gtm.idmanagedsolutions.com/finra/BondCenter/BondT...
This all makes sense. Admittedly, I haven't been a large bond investor in my 10 or so years of investing. I've pretty much been 100% equities, as I am now, but that doesn't mean I will never invest in bonds or that they won't present huge opportunities from time to time. In fact, I am certain they will. As for now, I'm trying to stay inside my circle of competence.
Also, I stumbled across IMN's debt while I was researching the equity. I figured 6% YTM/YTFC senior, high-grade debt isn't crazy in today's world (unlike US treasuries). Globalist, continued thanks for your contributions. Nothing brings credibility like a personal track record of results. I don't post often as I'm usually looking for equities, but I do read the board a few times a week.
LONGRETS,The bond game --and it is just a game, as is stock investing or Black Jack-- can be done in one of two ways. Either you’re making bets on the level/direction of interest-rates, or you’re making bets on the level /direction of an issuer’s credit-worthiness. For all practical purposes, gambling on interest-rates is tough game to play well for being no less demanding than currency trading. But gambling on credit-worthiness can be an investing game. In fact, it can be a very clear instance of classic, Ben Graham-style, value investing in which you are attempting to buy assets at a sufficient discount to their estimated intrinsic-value as to create a margin of safety for yourself. By and large, fixed-income value-investing is easy to do, and it requires no more skill than basic familiarity with financial statements and a bit of probability theory, like, “if I buy this piece of trash, what’s the likelihood and magnitude of my downsides (always to be considered first) versus my upsides?” If you can’t price the risks, prudence demands that you back away. If the price isn’t favorable, prudence demands you back away. If the risk/reward profile seems tolerable, such that it would offer you a positive-expectancy on average and over the long haul, you execute, and then you do it again, and again, and again. Scan-vet-execute. That’s a very clear paradigm. Where most would-be fixed income investors screw up is that they fail to think about what they are doing. Specifically, they fail to answer for themselves this question. “How much more will my dollars buy me when they are returned (via coupon payments, or cap-gains, or the simple return of my principal) as compared with my present-day purchasing power?” If the answer is that a person will be worse off in terms of the goods or services he/she could buy, then why do the trade? Why not look for a better opportunity to put that money to work? The answer to that question is three-fold. Most people have no idea how to find better opportunities, nor do they want to learn how to find them, nor are they willing to do the work of finding them. Gosh, isn’t that a surprise? In fast-food America, people want fast, easy investing success, which TMF does nothing to discourage with its endless promo pieces and “advisory services”. But the next time you pay a journeyman craftsman the union-scale wages she/he will charge you (be that craftsperson a doctor, a lawyer, an electrician, a plumber, or your friendly auto mechanic), also ask him or her this question. “Say, tell me. I’d like to make some quick, easy money in medicine, or law, or pipe-fitting next week. Can you tell me the name of a good book to read over the weekend?” If that same question were asked of an obviously successful investor, the answer might go like this. “Nah, forget the books. Just do this. First, think about how you intend to price and manage your risks, and then go find an investing game that seems fun and that you could do within the constraints of your time and capital.” Obviously, what isn’t being mentioned is that the would-be investor had better come up with a theory of how inflation and taxes will impact their investment returns, if they ever do achieve any gains, which is highly doubtful, as the Dalbar 20-year studies of investor results so clearly document. My advice to you with regard to trying to break into the bond game at this point in the credit and interest-rate cycle? You’d be wasting your time. Stick with the game you’re already got going for yourself at which you’re already making decent enough money. Right now, bond risks are horrendous, and their pricing is adverse. There’s easier money to be made elsewhere. But after the economy cashes again? Ah, then is the time to go bond shopping, because there’ll be bargains aplenty. Is it a certainty that the economy will crash again? Yes it is. And here’s a good enough reason why. http://www.youtube.com/watch?v=j2AvU2cfXRkCharlie
"My advice to you with regard to trying to break into the bond game at this point in the credit and interest-rate cycle?You’d be wasting your time. Stick with the game you’re already got going for yourself at which you’re already making decent enough money. Right now, bond risks are horrendous, and their pricing is adverse."I agree with you completely. I am trying to educate myself on fixed income so that I have the skills available when the time comes to be able to identify and seize opportunities. I also feel being a better bond investor makes me a better stock investor, and vice versa.I am reading the following great books:Fixed Income Analysishttp://www.amazon.com/Income-Analysis-Institute-Investment-S...(spectacular)andThe Outsidershttp://www.amazon.com/gp/product/1422162672/ref=s9_simh_gw_p...(highly recommended and I believe it could very well go down as one of the most influential books ever written on investing)
LONGREITS, If you’re willing to read Fabozzi, then add this book to your list. http://www.amazon.com/High-Yield-Bonds-Structure-Strategies/... If you like Thorndike’s book, then try some of Jack Schwager’s. http://www.amazon.com/s/ref=nb_sb_ss_i_0_13?url=search-alias...But if you really want to understand bond investing -- and I do mean investing-- you need to come at it as a good stock or futures trader would and focus on the trilogy of Money-Mind-Market. In other words, you need to dig into behavioral finance and gambling theory in an effort to understand why/how we humans all make such very bad decisions for ourselves about money and risk. But an easy shortcut to those topics is Justin Mamis’, The Nature of Risk., http://www.amazon.com/Nature-Publishing-Library-Contrary-Opi...The key idea is this. There is a trade-off between ‘information-risk’ and ‘price-risk’ that we humans aren’t comfortable making, which is why the idiot academics (sorry for the tautology) like Markowitz, Merton, Scholes, Sharpe, Malkiel, Bogle, Bernstein (Wm, not Peter), etc. inevitably screw up the money entrusted to them to manage, as well as give out horribly bad advice. The obvious antidote to that group of truly stupid people is the books and technical papers of Mandelbrot and Taleb and their demonstrations of the limits of statistics when they are applied to non-physical domains. E.g., http://vantagepointtrading.com/wp-content/uploads/2010/05/Th... http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1142785But if you want an even easier shortcut to all of the above, just go shopping at your local market for bell peppers and broccoli. Everything needed to make money in bonds is there if you just pay attention. That’s all bond-investing is. It’s just shopping. “How much am I paying, and what am I getting in return?” One can get fancy about the process. But that’s the basic question. Charlie
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