$KTBA (AT&T/ BellSouth, BBB) 7% '95 in USA: 9.35% Current Yield, 9.35% Yield to Maturity

[COBFInfinity]

36 minutes ago, cm2 said:

It appears you know little of Berkshire and understand even less: 

 

 "Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years." - Warren Buffett

 

Lol, no one does that. And even if they did, isn't there a slight difference between 10 and 70 years?

[Sweet]

Even Berkshire doesn’t do that anymore.  They trade in and out all the time now. 

[Saluki]

There are easier ways to get 9.35% than an illiquid bond that won't pay back the principal for 70 years, and is 

"Expert Market" only - no discount electronic brokers

 

First, how is the discount to par supposed to close if there isn't a big pool of buyers? Second, if you are in it for decades, that means that you don't need the money right now, and if you don't need it right now, you can get more by investing in equities. If you think this company will be around in 70 years and doing well enough to pay the bonds, why don't you buy the common? 

 

There is a cumulative preferred that I own (which I won't mention because I have some resting bids on it), but here is another that I don't own, but in a similar position: LFMDP. It's discount to par means that if you buy it now you can get over 9% dividend, and you can buy it with your discount electronic broker, not the Expert Market. Because it's profitable and growing, at some point they will probably call the preferreds and the discount to par will close, and you don't have to wait 70 years for that extra bump. 

 

I know you are about to attack me and pound on the keyboard and yell "THIS IS A BOND, NOT A STOCK!!!", but preferred shares are just bonds cross-dressing as stocks, and you know it. 

 

[Red Lion]

On 8/20/2025 at 5:55 AM, Saluki said:

but preferred shares are just bonds cross-dressing as stocks, and you know it. 

And a 70 year bond is a stock cross-dressing as a bond..

[gfp]

Be careful if you buy a tiny illiquid expert market bond inside a trust preferred you will have no liquidity unless you spam the internet to generate a bid when you need some money.  After creating 3 or 4 separate threads here to do this, all in "general discussion" for some reason (maybe because "investment ideas" is behind a paywall?), you will disappear until you need a bid again to let everybody know about the opportunity.  We used to call it being a "stuckholder" instead of stockholder.  Otherwise, you can wait patiently for maturity.

 

 

 

Edited August 22, 2025 by gfp

[cm2]

On 8/22/2025 at 4:34 PM, Red Lion said:

And a 70 year bond is a stock cross-dressing as a bond..

Amateurs talk about maturity dates ....duration here is less than 14 years

 

We are in falling rate environment

 

I could care less about generating a bid i have $1,000,000s cash i need to put to work here and these $KTBA just gush cash at fat yields

They are prob ~50% undervalued (fair value almost $30) 

[cm2]

On 8/22/2025 at 4:45 PM, gfp said:

Be careful if you buy a tiny illiquid expert market bond inside a trust preferred you will have no liquidity unless you spam the internet to generate a bid when you need some money.  After creating 3 or 4 separate threads here to do this, all in "general discussion" for some reason (maybe because "investment ideas" is behind a paywall?), you will disappear until you need a bid again to let everybody know about the opportunity.  We used to call it being a "stuckholder" instead of stockholder.  Otherwise, you can wait patiently for maturity.

 

 

 

 

 

The most important point here is that I was directionally 100% right on my analysis

 

True that I dont really understand way to optimize this website / message board

 

at 50% undervalued, I think $KTBA is a screaming value

 

 

 

 

 

[gfp]

why not take it all for yourself ?

[COBFInfinity]

15 minutes ago, cm2 said:

Amateurs talk about maturity dates ....duration here is less than 14 years

 

We are in falling rate environment

 

I could care less about generating a bid i have $1,000,000s cash i need to put to work here and these $KTBA just gush cash at fat yields

They are prob ~50% undervalued (fair value almost $30) 

If you are smart enough to predict the direction of interest rates, this is definitely one of the WORST ways to play it, lol! A highly illiquid security with a duration of ONLY 14, with credit risk, and you already acknowledged does not get priced at fair value...hard to imagine why anyone would bet on interest rates with this thing.

 

Just admit that you're trying to pump up the price and then go away. We're all aware of the security's existence and can follow it if we choose. Again, I have had KTBA calculations in a spreadsheet going back to 2007 and have owned it briefly a time or two. You're not the only one who knows about it.

[John Hjorth]

19 minutes ago, gfp said:

why not take it all for yourself ?

 

*Chuckle*

[cm2]

The underlying AT&T bonds cusip 079867AP2 are 6.80 ytm BID on screen for $US 5,000,000 and w $KTBA you can buy 200 bp CHEAPER

 

50% undervalued on investment grade bond on preferred wrapper is like wet dream

 

AT&T has already tried to buy back bonds, they agree with me...only matter time before they make big premium tender...or not i dont care

$KTBA pays fat juicy cash coupon every 6 months

 

Let me know anything you know w same investment characteristics I will buy ALL of them

 

 

[cm2]

32 minutes ago, gfp said:

why not take it all for yourself ?

I have position limits...have thought about making exception...even just reinvesting coupons

[gfp]

14 minutes ago, cm2 said:

I have position limits...have thought about making exception...even just reinvesting coupons

 

If you can make an exception they aren't limits!

[73 Reds]

17 minutes ago, cm2 said:

I have position limits...have thought about making exception...even just reinvesting coupons

I was not aware of this and am glad you brought it up here.  If the ask price dropped down to somewhere near where it traded in 2022 it would be of interest.  Otherwise, the yield is not particularly attractive [to me] at this time. 

[Red Lion]

2 hours ago, cm2 said:

Amateurs talk about maturity dates ....duration here is less than 14 years

 

We are in falling rate environment

 

I could care less about generating a bid i have $1,000,000s cash i need to put to work here and these $KTBA just gush cash at fat yields

They are prob ~50% undervalued (fair value almost $30) 

 

If you had millions of cash that (still) need to be put to work in this idea, why would you be shilling an illiquid bond? Wouldn't this be the amateur move? 

[thepupil]

53 minutes ago, cm2 said:

The underlying AT&T bonds cusip 079867AP2 are 6.80 ytm BID on screen for $US 5,000,000 and w $KTBA you can buy 200 bp CHEAPER

 

50% undervalued on investment grade bond on preferred wrapper is like wet dream

 

AT&T has already tried to buy back bonds, they agree with me...only matter time before they make big premium tender...or not i dont care

$KTBA pays fat juicy cash coupon every 6 months

 

Let me know anything you know w same investment characteristics I will buy ALL of them

 

 

 

cm2, I have no issues with the pitch, seems like an interesting structural discount, but that is hard for most to take advantage of. 

 

I'm just kind of curious why over the course of 2 years, you've made 37/38 post regarding this. 

 

what are some other of your ideas?

[cm2]

2 hours ago, thepupil said:

 

cm2, I have no issues with the pitch, seems like an interesting structural discount, but that is hard for most to take advantage of. 

 

I'm just kind of curious why over the course of 2 years, you've made 37/38 post regarding this. 

 

what are some other of your ideas?

Based on the recption here doubt i will post other ideas, thanks.  But you should feel free to do so...

[thepupil]

1 minute ago, cm2 said:

Based on the recption here doubt i will post other ideas, thanks.  But you should feel free to do so...

 

i think people may be more receptive if you were to discuss a more diverse group of ideas vs one. discussing one idea over a couple of years (and meeting any feedback with hostility and condescension) might give others the impression that you have ulterior motives. 

 

if you're just here to share ideas in good faith, then why not do that rather than remind folks for the 39th or 40th post that these bonds are a little cheap. 

[cm2]

1 hour ago, thepupil said:

 

i think people may be more receptive if you were to discuss a more diverse group of ideas vs one. discussing one idea over a couple of years (and meeting any feedback with hostility and condescension) might give others the impression that you have ulterior motives. 

 

if you're just here to share ideas in good faith, then why not do that rather than remind folks for the 39th or 40th post that these bonds are a little cheap. 

an investment grade "bond" w 50% upside is more than a little cheap, and again, feel free post some of your own incredible ideas (which I see no evidence of)

[thepupil]

I calculate about 30% upside to trading at parity with the underlying debentures, do you see similarly?

 

then again, the bond is very much owned by the CORTS so one could ask which is the derivative and whcih is the underlying? ( i see only $75mm outstanding of this bond and there's 2mm CORTs @ 25/share, so do the CORTs own 2/3 of the issue?

 

 

 

 

 

 

 

I own lots of things that feature liquidity, control, or other forms of structural discounts, a selection of some but not all of them include the below. I don't claim to be a repository of excellent ideas. I'm just trying to turn $1's into $1.5 and preserve and grow my capital. 

 

my point is simply that by only discussing one security which trades at an illiquidity discount (century bonds themselves are illiquid) gives the impression of ulterior motives, as does your need to insult anyone constructively engaging. 

 

Are you a real person? or a bot that is programmed to drive engagement by responding negatively to anyone who responds to you?

 

BKUTK @ 1/3 of book, w/ > mkt cap in equities

AHH @ maybe 60% of NAV w/ new mgt in simplification/deleverage mode as well as mix shift to multifamily

FMBL @ 1/2 of book, having just filed a proxy indicating ani institutional investor is seeking to inject $200mm @ 2x the stock price

NEN @ <$200K/ apartment unit in a market where hard to buy/build @ <$300-$400K w/ recent worse collateral having just traded (AIV) well inside

TFG @ <1/2 of NAV w/ upcoming catalyst in the form of Ripple Labs potential IPO, GreenOak put exercise, continued capital return

JOE @ < many people think, discussed ad nauseum here

FRPH @ ~75% of low end of company NAV discussed ad nasuem

ILPT @ 40% discount to equity in one asset

 

Edited August 26, 2025 by thepupil

[thepupil]

maybe the better way to think about it since T's century bonds are so illiquid is to mark them at a spread to the 30 yr of 200 bps, where T's 2060's trade. this spits out $25.75 or so relative to trading price at $20.5, so by buying a $50mm issue on the expert market, you get a nice structural discount of 20%. for some the incremental yield pickup of 200 bps may be worth that. for others maybe not. the T 2060's are a $1.5B issue and therefore much more liquid. have a lower coupon and therefore much more convex. 

 

I don't know what the right discount is, but it's not 0%

Edited August 26, 2025 by thepupil

[DooDiligence]

38 minutes ago, cm2 said:

an investment grade "bond" w 50% upside is more than a little cheap, and again, feel free post some of your own incredible ideas (which I see no evidence of)

 

[cm2]

5 hours ago, thepupil said:

maybe the better way to think about it since T's century bonds are so illiquid is to mark them at a spread to the 30 yr of 200 bps, where T's 2060's trade. this spits out $25.75 or so relative to trading price at $20.5, so by buying a $50mm issue on the expert market, you get a nice structural discount of 20%. for some the incremental yield pickup of 200 bps may be worth that. for others maybe not. the T 2060's are a $1.5B issue and therefore much more liquid. have a lower coupon and therefore much more convex. 

 

I don't know what the right discount is, but it's not 0%

 

$KTBA has only one asset, the T 7s of '95 which are 6.70 BID for 5mm live on screen, not sure i need a discount for the wrapper, but ok 

Thats a direct comparison

I still think spread vs treasuries is indicative of true hypothetical value - sb like 100, nor 200 which is junk

 

My business model is a decent sized fixed income portfolio spitting cash for me to allocate in after tax profit maximizing special situations

Results have been excellent

Edited August 27, 2025 by cm2

[gfp]

Charlie Munger #2, why not just reinvest in increasingly cheap and attractive KTBA?  The cheaper the better for reinvesting the distributions from your fixed income portfolio right?  Why would you want a strong market price unless you were interested in selling?

[cm2]

15 hours ago, gfp said:

Charlie Munger #2, why not just reinvest in increasingly cheap and attractive KTBA?  The cheaper the better for reinvesting the distributions from your fixed income portfolio right?  Why would you want a strong market price unless you were interested in selling?

I'm indifferent to market price because i am not selling, not even 5 points / 20% higher bc i want the cash flow - just pointing out that they are very cheap

seems like most here just like make basher comments lol

I was reinvesting for time until hit a soft limit on position size, now happy to share idea

 

 

Edited August 27, 2025 by cm2