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In Distressed Investing, There Is A Magical Pattern
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Over the past week, Porter has been talking about how buying distressed bonds is providing him with a Second Life… and, more broadly, about how bonds are the investment world’s best-kept secret. They offer (if you buy the right ones) a high level of security… fantastic returns… and significantly less volatility than stocks. What are you waiting for?
And of course… which distressed bonds you buy matters a lot. Marty Fridson, the lead analyst for Porter & Co.’s Distressed Investing, is a pioneer of the entire asset class… Investor’s Digest called him “the most well-known figure in the high-yield world.” Marty joined Porter & Co. in March 2023. Since then he’s made 17 distressed-bond recommendations, which are up 16.4%.
However: Marty also has an impressive track record recommending stocks (in fact… he’s written an entire book – one of the seven books he’s written – about investing in stocks, 2023’s The Little Book Of Picking Top Stocks). And for the Distressed Investing portfolio, Marty has recommended six stocks, which (including closed positions) are up 39.4%, resulting in an average total portfolio return of 22.4%.
Today, Marty takes us under the hood of the Distressed Investing advisory, to see how he and his team find distressed equities – and he explains how the behavior of a company’s bond is often a precursor to how the same company’s shares behave.
Here’s Marty…
Distressed Investing’s primary focus is bonds, because that’s where the best low-risk, high-return opportunities exist.
But we also recommend distressed common stocks – because their behavioral relationship with their company’s bonds can combine to provide a boost to the overall return. These recommendations come about in two ways.