No. of Recommendations: 11
For about a month now, I’ve been going through my bond holdings, trying to sell off my mistakes, under-performers, and less-than-advantageous positions. Predictably, when I solicit a bid, it comes back at less than the inside-market. Such was the case just now. On 01/28/11, I bought a single of Valmont’s 6.620’s of ’20 at 104.250 (all-in). My projected YTM would have been a very modest 6.0%, and the annual loss to inflation (assuming a 5% inflation-rate) would have been (0.1%). So the purchase was mostly “parking money” rather than an attempt to appreciate capital. [Explanation: I don’t like to carry more than 5% cash, and I will buy whatever I have to in order to get spend it down.]

This morning, the inside-market for Valmont was 111.250 x 113.250, suggesting that I could get out at better than my purchase-price. So I solicited a bid and was offered 108.030. That was a low-ball. But I was offering out just a single, and I’d capture a couple points of cap-gains. So I accepted. Just now, a text message came back: Price improvement. Execution was at 111.071. So my YTM over my holding-period jumped to 17.9% (after commish), compared with the originally projected 6.0%. And this isn’t the first time a price-improvement has happened for me at E*Trade, either getting in or getting out.

I have no idea how E*Trade is for other asset-classes. But I find them to be a consistently excellent bond-broker in terms of breadth of inventory and executions.
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