Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Viacom Preferred Notes VNV 6.85%
Old 07-08-2008, 02:28 AM   #1
Full time employment: Posting here.
shiny's Avatar
 
Join Date: Jun 2005
Posts: 673
Viacom Preferred Notes VNV 6.85%

Ok, so this isn't really a "stock" and I don't buy many individual issues, so please bear with me on this post...

About 2 years ago I bought some of these notes on the original issue at $25. About a year later when DH and I were going over our accounts and this was hovering around $23 DH suggested that we buy more, so we did (in the tax deferred account this time). Well, yesterday it hit $21 and I bought more - during the middle of the night here in Tokyo (that's a whole other topic - market fueled insomnia in Japan) because the yield now is over 8%.

From everything I can find out about Viacom their profits are solid, and I'm hoping that these notes are just going down because everything else it.

Anyway, they are REALLY long term, like 12/15/55, callable in 2011.

Thoughts?
__________________

__________________
I'm made of atoms, you're made of atoms, and we're all in this together. Ben Lee
shiny is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-08-2008, 02:51 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,387
Quote:
Originally Posted by shiny View Post
Anyway, they are REALLY long term, like 12/15/55, callable in 2011.
Thoughts?
As you know Shiny I have had my scrapes with low quality fixed income securities. There always seem to be bats flying out of caves, sooner or later.

My only possibly useful thought here is that if by some chance interest rates go down, they call these notes. On the other hande, if rates should go way up, you will have a capital loss because higher quality bonds will be available also with high yields.

If inflation seems like a real possibility, this doesn't seem like a good trade-off.

Ha
__________________

__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 07-08-2008, 07:55 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Shiny, I looked at the prospectus for these things and they are senior unsecured bonds issued by Viacom. So in the event of a bankruptcy, you and the other senior unsecured holders would rank behind bank and other secured debt, but ahead of everyone else. This is significantly better than a preferred.

A (very) brief look at Viacom shows a healthy operating company with very nice properties and not too much debt. I don't see anything obvious wrong with the company's credit profile. I think you are seeing the bonds trade down because credit spreads on everything under the sun (gummint backed mortgage bonds, Berkshire Hathaway bonds, down to corporates and junk) have blown way out. And when credit spreads widen the longer the maturity the farther out they go. If the credit markets ever calm down, you will see your bond price drift up, although not much above par even in the best case given that they are callable. In the meantime, you get to clip 8% yield, so I don't see a problem with that. But the price could certainly slide further.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 07-08-2008, 07:38 PM   #4
Full time employment: Posting here.
shiny's Avatar
 
Join Date: Jun 2005
Posts: 673
Thanks guys for looking into this for me.

Ha, you know I don't have as big a stake in this as you deal with - so don't worry!

Brewer, thanks for the confirmation that there is nothing glaringly obvious that I missed. We're not expecting big gains, but didn't really expect a big fall either - oh well, I'll just appreciate the yield for now.

I did come across the fact that John Hancock owns about 25% of this for a couple of their mutual funds. interesting
__________________
I'm made of atoms, you're made of atoms, and we're all in this together. Ben Lee
shiny is offline   Reply With Quote
Old 07-29-2008, 11:21 PM   #5
Full time employment: Posting here.
shiny's Avatar
 
Join Date: Jun 2005
Posts: 673
Viacom reported better than expected earnings. That's a bit of a relief!

Viacom says strong film slate boosts 2Q revenue - Jul. 29, 2008
__________________
I'm made of atoms, you're made of atoms, and we're all in this together. Ben Lee
shiny is offline   Reply With Quote
Old 08-01-2008, 12:13 AM   #6
Recycles dryer sheets
 
Join Date: Jun 2007
Posts: 183
Who knows. You may regret not purchasing VTI instead.

HY notes are a crapshoot. If rates rise, NAV dies. Risk of default. If rates lower, they call them in.

All the risk, none of the upside. If I was retired I may be lured by the high payout but certainly not at this point in my life.

In a way this isn't much different than those 12% iceland CDs you read about
__________________
innova is offline   Reply With Quote
Old 08-01-2008, 05:58 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Quote:
Originally Posted by innova View Post
All the risk, none of the upside.

I have seen this sentiment expressedseveral times ion the forum. I am curious: if you buy a bond with an 8%coupon (at par) and pay 60 cents on the dollar, are you still convinced there is no upside if it iis called or matures?
__________________

__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Principal-Protected Notes. Disappointed Stock Picking and Market Strategy 2 06-14-2008 09:23 AM
Guidelines, Notes or factors to consider for ER maxer FIRE and Money 0 10-13-2007 02:49 PM
GMAC Smart Notes - What do you think KB FIRE and Money 4 10-01-2004 08:11 PM
CD or Treasury bills and notes? Natalie FIRE and Money 4 07-14-2003 09:46 PM

 

 
All times are GMT -6. The time now is 08:54 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.