Sold Revlon, bought PBF logistics.

music selection:  “Jive Talkin'” — Bee Gees

Several positions expire tomorrow. All are in a good place except a bear put spread on Colgate Palmolive (CL). I’ll likely take a loss in the range of 6-7% on the trade tomorrow.

I bought the Revlon 5.75 coupon bond with the 15FEB2021 expiry on 05JUL2018 for pricing between 75.5000 and 77.0000. I paid 6,900 plus 18 dollars in commissions and 217.06 in accrued interest for 9 bonds. The bond fell dramatically with the company approaching bankruptcy during COVID-19. They were able to engineer a debt swap agreement that was accepted by institutional investors and the bond returned to near par. I sold today for 99.7500, paying 20.50 in commissions and fees and receiving 140.88 in accrued interest. I likewise received 143.75 in coupon payments per bond during the holding period.

The holding period was 858 days which makes the annualized return 18.21%. The total cash return is 10,189.13. I don’t expect an opportunity to flip this bond again as it is nearing maturity and a mortal lock to pay at par.

I bought the bond of a refinery MLP today as well. I picked up the PBF Energy 6.8750 coupon bond with 15MAY2023 maturity for 91 cents on the dollar. I paid 8 dollars in commissions and fees and 12.22 in accrued interest. This is a bond I consider “money good” as it has interest coverage over 4 times. Its revenue took a hit during COVID but actually continued to grow a few hundred basis points year over year. They are largely immune to commodity pricing and the general partner has a clause whereby they must guarantee the bond if the partner cant pay. Curiously, the bond tracks the price of oil and not the fundamentals of refining. I expect to flip this at par or better if oil goes above 52/bbl. The yield to maturity, should I hold to maturity is a little over 11.08%. I consider that fair compensation for the risk taken and in fact better than most equity returns, for less risk as I’m supra in the capital structure to shareholders.