Boiler Room: The Official Stock Market Discussion

Domingo Halliburton

Handmade in USA
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Brooklyn Without Limits
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JP Morgan likes European equities.
 

ExodusNirvana

Change is inevitable...
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Thinking about getting into some mid cap banks but I wanna get in at a good price point.

RF, HBAN, KEY....

I feel like I should have got in yesterday :patrice:
 

GoogleMe

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The Street

Carlos Huerta

Just keep my rep red
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This guy has a very good approach. It's not too complicated if you can read a balance sheet -

This Fund Manager Picks Stocks by Watching Bonds, Beating 99% of Peers

To do that, Rufenacht focuses on four things. First, he buys only true high-yield bonds, not other securities such as convertibles that junk-bond investors sometimes buy. Second, he avoids companies in cyclical industries that tend to end up with too much debt when the economy turns down. “I instead try to find anti-recessionary types of industries like the supermarkets, cable, health care—even the casino industry historically,” he says. Third, he aims for shorter duration than the benchmark to reduce risk from rising rates. Fourth, he seeks companies that have articulated a desire to pay down debt—or have the ability to do so. “What I’m really looking for is that they’ve got this free cash flow,” Rufenacht says. “Debt doesn’t merely stay flat, but it actually goes down because they take the checkbook out and they pay off bank debt.

Consider Sealed Air, for example. Back in 2011, the maker of Bubble Wrap packaging bought Diversey Holdings, a maker of cleaning products, in a $4.3 billion deal. Before the acquisition, Sealed Air had about $2 billion in bonds and loans. Afterward, its total debt jumped to $5.9 billion.

The next year, the company announced that cutting debt was one of its main goals. “Sealed Air even linked a significant portion of CEO compensation to achieving its debt-reduction goals,” Rufenacht says. In mid-2012, when the fund first bought Sealed Air shares, the stock traded at about $15."
 
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