Intrepid Capital Funds

Many investors are uncertain about whether to treat preferred stock more like debt or equity. The major ratings agencies don’t help much, as each use different methodologies to classify preferreds. ???One says preferred stock is either 0%, 50%, or 100% equity ???Another says preferred stock is either high, intermediate, or no equity ???And a third labels it either 100% equity or 100% debt The difference matters, as ratings can play a critical role in how companies manage their capital structure. Understanding how companies can exploit these ratings differences can reveal compelling opportunities – and risks - for fixed income investors. #fixedincome #preferredstock #investment

Do you prefer investments that provide a steady income? Do you prefer yields generally higher than corporate bonds? Do you prefer your investment income taxed at lower rates than ordinary income? Maybe it’s time you considered investing in preferred stocks. It’s an overlooked asset class. But it can provide solid returns. Especially if your preferences align. #fixedincome #preferredstock #investment

Ever notice how small investment niches can offer big opportunities?? Take preferred stocks. These hybrids investments trade like stocks and pay regular cash payments like bonds. Currently, there are a bit more than $1 trillion of these available: A fraction of the $34 trillion global corporate bond market And yet … … potential returns can be substantial for those who know where to look.? #fixedincome #preferredstock #investment

What’s your backup plan? A solid investment strategy is crucial, but a backup plan is essential. Our Plan A focuses on borrowers with strong cash flows that can easily repay their debts. But when the unexpected happens? That’s where Plan B comes into play — building in a margin of safety. The concept of margin of safety is a core part of our credit analysis. Management’s integrity, the company's fundamentals, liquidity levers… nothing escapes our scrutiny. Because getting paid back on time—no drama, no surprises—is job 1. #fixedincome #HighYieldBonds #smallcap

Your investment choices shouldn’t hinge solely on a company’s financials. The behavior of its management team is critical, too. Especially if you’re considering how likely it is they’ll treat creditors fairly.??Check out the 4 key factors behind our go/no-go decisions to invest in a company’s debt ?? These characteristics all roll into the calculation of our margin of safety on any given investment—an analysis we explore in our latest blog. https://hubs.la/Q02TwkKM0 #fixedincome #HighYieldBonds #smallcap

The scoop on company liquidity levers: ?? Pull them and watch the cash flow in, keeping bondholders happy. ?? Delay or refuse to pull them and watch bondholder questions grow urgent. Liquidity levers (some of our favorites ??) can make the difference between an attractive investment and a move-along call. So can management’s willingness to implement such bondholder-friendly moves. That’s why they’re a big part of the margin of safety we seek on all of our short-term high-yield debt investments. #fixedincome #HighYieldBonds #smallcap

Financial markets can quickly shift from smooth sailing to rough waters. ?? ??That is why it’s critical to prepare for what could go wrong well ahead of time. We look for a margin of safety in our holdings, which is a concept that is sometimes only thought to apply to stocks. How do we extend this risk management approach to fixed income? https://hubs.la/Q02TwbQV0 #fixedincome #HighYieldBonds #smallcap

What do we see as the primary difference between rated and non-rated bonds?? ??? The letter that helps us divvy up our pretty quarter-end pie chart.? ??? Aside from that, every one of our bond holdings undergoes the same rigorous fundamental analysis.? Which contributes to our attraction to non-rated bonds, which frequently offer more attractive risk/reward opportunities than rated bonds.?? For the same amount of work.? We published a blog post on how we address the unrated bond universe in our Advisor Insights blog.? #highyieldbonds #smallcapcredit #unratedbonds

Over the long haul, the American economy cannot run on the mid-teen lending rates that businesses are currently being offered. History tells us the cure for higher rates is higher rates. ↗? That is, eventually, people won’t accept the higher rates, a cycle will occur and we’ll have creative destruction. ↘? Obviously, we would prefer a soft landing, but we’ve got to be pragmatic and prepare for other possibilities. For more context on our rationale, watch our recent online discussion. https://hubs.la/Q02M5X4W0 #corporatebonds #smallcapcredit #highyieldbonds

In what many are calling “a big moment for the economy,” the Fed cut rates yesterday for the first time in four years. Our Chief Investment Officer & Portfolio Manager, Hunter Hayes, CFA, had the chance to share some thoughts on this with Bloomberg. What are your thoughts on Hunter's insights? https://hubs.la/Q02QtsRt0