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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.

Credit Trend Analysis

The four major distinguishing characteristics of this research:

  • an emphasis on trend, as opposed to current condition, although both are considered
  • an emphasis on free cash flow, as opposed to reported net income, although both are considered
  • an emphasis on quality of earnings (growth rate of free cash flow as compared to growth in debt, capital expenditures, receivables, inventory, payables and S,G&A).
  • an emphasis on the intrinsic value of the company's common stock (calculated several different ways including free cash flow adjusted for growth, and historic relationships of price to free cash flow and book value per share)

The Grizly Bond Trader applies credit trend analysis to companies that have issued high-yield and/or convertible bondsEight quarters and ten years years of income statements, balance sheets and cash flow statements are considered (fifteen years for cyclical companies). These trends and financial statement characteristics are the basis of two publications:

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

Both publications report weekly on changes in price/value relationships and on financial statement trends.  You can subscribe to these publications separately or as one subscription. Weekly, each report contains:

  • five most interesting bonds based on current yield in relation in financial strength and financial statement trends
  • five bonds with the weakest trends
  • financial statement trend summary of all bonds followed (744 high yield bonds and 382 convertibles)
  • succinct conclusions

 

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.
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For more on the analytical approach of Roderick MacIver & Co. Inc. see Methodology.