FFH 2037 7.75's

[watsa_is_a_randian_hero]

Anyone else own these?  As mentioned previously on this board, over the last 12-18 months I had sold off a lot of my FFH stock position at prices 400+ and reinvested much of the proceeds in the 2037 bonds priced in the lower 90s.  My broker is now quoting in the 116.875 today. 

 

If anyone else owns these, I'd be interested in getting your thoughts on what price/spread you'd be looking to exit at.  I think I'm going to continue to hold for now.  I'm hedged on the fixed rate as I'm already short the 30 year treasury bond, so I am long the spread here. 

[watsa_is_a_randian_hero]

wow no replies?  I thought there would be other owners of these out there. 

[StubbleJumper]

I'm not surprised that few others on the board hold the bond.

 

Every P&C insurance company bears a certain risk of blowing up due to a series of uncorrelated events, poor risk management or a poor investing environment.  With FFH, that risk is small, but it still exists.  Why would we lock ourselves into a 25-year security at 8% and expose ourselves to that risk?  At least with the equity, there is a real prospect of 15-20 percent returns to compensate for the remote potential of incurring a permanent loss of capital.

 

 

SJ

[benhacker]

My feelings are similar to SJ.  If I was being offered 116 to leave the bonds, I would do so.

 

Ben