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Oaktree’s Motto: If we avoid the losers, the winners take care of themselves. . . . avoiding defaults is key in bond investing. If you buy below investment grade bonds and they survive, the surprise is likely to be on the upside. “If they survive” is the key assumption. . .
- Howard Marks, from his talk at Google.

The analytical basis of  The Grizly Bond Trader is credit analysis software that utilizes hundreds of ratios applied to eight quarters and fifteen years of income statements, balance sheets and cash flow statements. I analyze and document the financial statement trends of public companies with:

  • convertible bonds (The Grizly Convertible Trader)
  • high-yield bonds (The Grizly High Yield Trader

The Grizly Bond Trader reports weekly on changes in the price/value relationship, and quarterly on the financial statement trends, of these companies. 

You can subscribe to these publications separately or as one subscription. Weekly, each report contains:

  • the ten most interesting bonds based on current yield in relation in financial strength and financial statement trends. 
  • succinct commentary and conclusions

The ranking protocol used in this analysis:

  • Profitability based on free cash flow rather than reported earnings
  • Quality Of Free Cash Flow: growth in debt, capital expenditures, inventory, receivables and payables that is less than the growth of free cash flow.
  • Balance Sheet Strength:
    • current ratios of debt to equity, interest coverage by free cash flow
    • Equity and free cash flow versus total liabilities
    • Liquidity: cash, inventory, receivables, relative to current liabilities and total debt
    • Both current situation and trends in the above
  • Growth:
    • free cash flow growth (50% weight)
    • revenue, gross profit, operating income, net income, EPS, book value per share and dividend growth (combined 50% weight)
  • Intrinsic Value Of Common Stock: 
      • for convertibles, intrinsic value of the underlying common stock is one indicator of potential upside
        • for high-yield bonds, intrinsic value of common stock is an indicator of debt-holder cushion
          • our estimate of intrinsic value is based on free cash flow, both adjusted and not adjusted for growth:
            • average price to free cash flow
            • the Graham & Dodd growth formula (from the 1962 edition of Security Analysis). For more on this formula, see my review of Benjamin Graham And The Power Of Growth Stocks.
            • the PEG (Price Earnings Ratio Adjusted For Growth) formula
            • current free cash flow per share discounted at 6%
            • long term stock/price-to-book value relationship
                • five year trends and comparisons are used for non-cyclical companies, fifteen year for cyclical companies.
          See the Methodology section on this website for more on techniques employed.
          Subscription Options:
          Professional Investor 
          (Investment Manager, Investment Advisor):  Visit here.

          Individual Investor (An investor managing his or her own money): Visit here.
          . . . . .
          For more on the analytical approach of Roderick MacIver & Co. Inc. see Methodology.