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Pricing vs. Valuation and Companies in Transition | When ”Safety” Is Not Cheap
This Week in Intelligent Investing
The High Heeld Bond Index Was Down More Than Was the S M P
The high heeld bond index was actually down more than was the s m p. And spreads have gone up this though. They're basically in the low end of the post g f c range. Meanwhile, as you've mentioned, phil, it's been a terrible time to be a bond or equity investor.
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Speaker 2
And spreads have gone up this though. They're basically in the low end of the post g f c range. And they're not giving any sort of indication of pain. Meanwhile, you know, as you've mentioned, phil, it's been a terrible time to be a bond or equity investor. So despite spreads not blowing out, or even moving very considerably, a i think, i don't know if to day probably changed things a little bit, but before were recording this on you said, you said the dat friday, april 20, second, the ah. Yet before to day, though, it's no longer the case. The high heeld bond index was actually down more than was the s m p. You're to tate go figure. Eh, well,
Speaker 1
tha, that could be reflection. It's a great point, the observation. I mean, it could be a reflection of all this kind of stuff, but there was just an underpricing of risk. And that if you have a business model, ah, that was on less than stable foundations coming into this year. Nowl of a sudden that's really being reevaluated, because inflation and the hopeful exit from the covet era is on the horizon, along with things like the oandcrane and all these thingsi the supply change thatare on going. All these things have just made people sit up and realize the weight. A minute i was pricing this risk, it acts. And maybe it's not ts, it's 20, 30, forty %, higher or lower in either direction, depending on whether they're effected favorably or negatively by this. And almost everybody's affected negatively by these events. So ab look, i'm looking right now. It one of the withstand the temptation to name this company for right now.
Speaker 3
This is a a
Speaker 1
so called cove at winter. Although the company's been around for ten years, and it's been a darling of many, many a concentrated similar pur fund managers, where it was supposed to be the next great thing, but it's never generated a nickel of gashflow, even though the top line's been growing dramatically, and they've had to raise quite a bit of debt. And the det's been always triple rated. And trading it, you know, a massive, you know, premium to anything you think would be for a company thiss, highly valued in the equity market.
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