(UPDATE Feb 15: It sure is nice seeing those dividend checks coming in. So far today we have FIFTEEN divi payments….thats right, 15. Why spend all your time buying and selling stocks when you can buy a position and just sit back and wait for the dividends to roll in.)
(UPDATE: Yellen wants to raise rates sooner rather than later. Our bond holdings will decrease in value but keep in mind that we hold individual bonds to maturity. It can be alarming to see values decrease but this is temporary as they do mature at full value. Typically the bond prices do start to trend upward after a rate increase, but having said that, we are always watching and will sell holdings if circumstances warrant.)
February 13, 2017
We have been taking advantage of numerous bond opportunities within the past few weeks.
PLEASE NOTE: With only a few exceptions, we do NOT invest in bond mutual FUNDS and bond exchange traded funds. They are the funds that CNBC and “financial advisors” try to sell you. In a rising rate environment, bond FUNDS are losers.
We prefer to invest in INDIVIDUAL bonds, baby bonds, floating rate funds, and target maturity bond funds. See Core Portfolio for a listing. We buy bonds with a maturity date in which you are assured of getting your money back (assuming the Company is still in business) and you also receive dividends while you own the bond.
So what are we looking at today.
Tailored Brands/Men’s Wearhouse is offering a lower quality corporate bond. It provides an 8% yield to maturity in July 2022.
The Company is dishing up some pretty good numbers and so we are going to buy a very small number of the bonds. This is by no means a high quality bond but if you want to take a little risk, this position might be good for you.
Here is some copy from the website and the link if you want to read the full article. (having retired many years ago, we pay little attention to the clothing market, but the article is quite interesting even if you do not buy the bonds)
For this week’s bond review, we look to to the retail industry to focus on the largest specialty retailer of men’s suits in the U.S. and Canada. Men’s Wearhouse (a part of the holding company, Tailored Brands) recently posted excellent third quarter results for the three months ending October 29, 2016.
A 20.3% increase in Q3 operating income.
Operating cash flow for the first nine months of FY 2016 was $176.0 million, $65 million higher than the previous year period.
Earnings per share in Q3 registered $0.58 per share as compared to a loss of $0.56 a year earlier.
Annualized cost reductions in Q3 totaling $17 million.
Debt reduction in Q3 of $18.5 million.