Turnaround Investing Blog

George Putnam, one of the country's leading turnaround and distressed investing professionals, shares his timely insight on the economy and turnaround investing opportunities.

High Yield Bonds / Post-Bankruptcy Stocks

High Yield Bonds: Time for Even More Caution

Excerpted from February 2013 Issue

From time to time we comment on high yield bonds (sometimes called “junk bonds”) because they are akin to turnaround stocks in several ways. While they are called bonds, many high yield issues have return--and risk--characteristics closer to stocks than to other fixed income instruments. Also, many companies that issue high yield debt are in the process of turning around, or at least trying to. Some high yield  issuers don’t make it, file for Chapter 11 and eventually provide interesting post-bankruptcy stock potential turnaround opportunities.                   

Last year at this time we urged caution in approaching high yield bonds, but our concerns proved to be unfounded as high yield had a very strong year in 2012. As measured by the Bank of America Merrill Lynch High Yield Master Index, junk bonds gained an average of 15.4% last year. In our defense, we did say “Maybe the high yield market can squeeze out another decent year before things head south…”

This year we urge even more caution towards high yield bonds. The yields on junk bonds are at record low levels--below six percent--and we believe that at those levels you are not being adequately compensated for the risks you are taking. The risks in high yield bonds right now come from a couple of different sources (learn more about those risk sources).

While it’s not certain that  the risks will materialize this year, we feel that the longer the current boom in high yield continues, the greater the risk of negative surprises. As we said above, at current low yields, holders of junk bonds are not getting adequately compensated for that risk.

Read More Distressed Investing Blog Entries

Learn George Putnam's Turnaround Secrets

Free Report: Top 10 Turnaround Stocks

Turnaround Investing Blog

Turnaround Investing Blog

The Turnaround Letter In The News: Equities.com & Forbes

With more than 30 years of turnaround investing and market-beating results, it's no surprise that media and market pundits often seek George Putnam's commentary, stock picks and unique contrarian expertise. Most recently, both Forbes and Equities.com praised The Turnaround Letter. Read More.

Market-Beating Profit: The 200+ Club

Turnaround stocks present a unique opportunity for savvy investors to buy in at bargain prices. Take a look at this list of just a few of our purchase recommendations that have realized a return rate of 200% or better:

Value Investing Stock Profit

* Bristow remains in our active portfolio (currently as a Hold), and 1,390% gain is as of 7/19/17.

Here's Why You Should Invest in Asset Managers

 

stock market advicex

 

This Forbes article cites a recent MoneyShow write-up that recommends investors take advantage of the strong stock market and potential interest rate hike by "putting some of your investment assets into the shares of asset management stocks."

 

The article praises The Turnaround Letter's OAK purchase recommendation and quotes George Putnam: "As the corporate debt binge that we’ve experienced since 2009 comes to an end, Oaktree will benefit from a growing number of restructurings and bankruptcies."  

 

Learn more about Putnam's investing success with turnaround stocks.