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Subject:  MDLX - Excellent Short and Long Term Yield Date:  10/25/2016  10:47 AM
Author:  tjberko Number:  81055 of 87033

MDLX is a 10 year exchange traded bond with a 6.875% coupon and par of 25. It is a recent IPO and now there is a secondary offering on it. Apparently the underwriters have no retail customers so they are dumping it on the market creating an excellent buying opportunity at $24.20.

Reasons to buy:

1) Bond goes ex-dividend 46 cents in a couple of days
2) Over the next 3 months you will collect 90 cents in dividends and once the dumping ends, it can easily trade at 24.68 giving you an additional 50 cents in gains. Over 3 months, the annualized return could be over 22%.
3) It is rated by Egan-Jones as A- and yet has a yield to maturity of 7.7% so it is very safe and crazy cheap. Checking other bonds like Hasbro, with only a BBB rating and 24 years to maturity yields only 4.75%. 10 year bonds of this quality generally yield around 4.5% while MDLX yields 7.7%. Look at PBB, a BBB- rated exchange traded bond. It sells for 25.80 and has only a 6.25% coupon versus 6.875% for MDLX.
4) I am not highly worried about higher rates, but being a bond means that you will receive at maturity more than you paid, so no interest rate risk if you hold it. Preferreds could be decimated if higher rates do occur over the next 10 years.

Disclosure - I own a ton of MDLX
Egan-Jones is the rating agency that doesn't get paid by the company to rate its stock, so no conflict of interest.
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