cdulan (92.98)

Don’t suffer the equities markets, buy XFR (BMY Debt Trust)

February 17, 2009 – Comments (1) | RELATED TICKERS: BMY , PFE , TLT

Don’t suffer the equities markets, buy XFR The equity and debt markets are topsy turvy from the surprises and pressure from the credit crisis.  Investors, scared of their own shadow regarding debt, are pricing all debt at a discount to gain safety in their positions.  Yet Big Pharma, an industry with incredible cashflow margins on products and strong barriers to entry into their markets, has also seen it's securities priced at a discount.   In the panic of the financial system, there are health care companies with products that customers literally cannot live without.  Bristol Myers Squibb, the maker of drugs such as PLAVIX, a blockbuster blood clotting therapy, and Abilify, a blockbuster drug for treating the bipolar, is one such company that investors cannot pass up a hidden opportunity to benefit senior debt offered to regular investors (NYSE: XFR) as preferred shares of a debt trust.
 
For those not familiar with debt trusts, these shell companies are created for the benefit of the company and the small investor.  The company issues standard debt, receiving favorable rates from the debt markets and tax advantages of issuing debt rather than preferred shares, to the trust.  The trust, in turn, sells shares like any other stock sold on the NYSE on the open market.  This structure allows small investors to invest with the liquidity of the NYSE market and without the large commissions of purchasing from the major brokers over the counter. 

This Bristol Myers Squibb debt trust pays the buyer of the trust shares dividends from the notes held in the trust.... (cont.)

http://lockstep-investing.blogspot.com/2009/02/dont-suffer-equities-markets-buy-xfr.html