Barron's: LBO Targets? Portfolio - Stockpickr! Your Source for Stock Ideas

Barron's: LBO Targets?

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Created by Barrons

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Date updated:03-10-2007

From Barron's 3-12-07:

"Private equity funds grab headlines with their enormous leveraged buyouts, but they'd barely merit the back page without the corporate bond market, which buys much of the debt that enables these deals. No one knows this corner of the credit markets better than Carol Levenson, an investment-grade bond analyst who helped found Gimme Credit in 1994. The research shop now boasts nine analysts who post pithy, yet insightful, comments on corporate bonds throughout the day...Here's Levenson's take on today's credit environment, how to approach LBO risks and where one might consider hiding."

Levenson also added that she has "some names where there are LBO rumors or event-risk rumors, that we have discounted to the extent where we feel that the bonds are attractive."

Here are some companies whose bonds she likes despite rumors of credit events like LBOs.

MOT
Motorola Inc
$8.18
+1.87%
$8.16

Yield: 6.25% due 2025 "Motorola [MOT] is one of them. It's a Carl Icahn scare [He's been buying shares and wants a seat on Motorola's board to pressure the company to give some of its $11 billion in cash to shareholders], and the company does have lots of cash....But as our analyst has explained, Motorola has already done so much to improve the company, what is there left to do? They are already doing stock buybacks, and he feels they can do even more in the way of buybacks without materially harming the credit."

People owning MOT also tend to own: C CLX CVS GOOG GS HD JNJ

TheStreet.com Rating: D+ What is this?

FDC
Fdc
$0.00
N/A
$N/A

Yield: 5.50% due 2015

People owning FDC also tend to own: BHS DG FAGIX INTC JH MNI MPX

TheStreet.com Rating: No Rating What is this?

AT
At
$0.00
N/A
$N/A

Yield: 7.875% due 2032

People owning AT also tend to own: PRNEX WIN AEE LUV MI MTB NWS-A

TheStreet.com Rating: No Rating What is this?

SLE
Sara Lee Cp
$12.22
+0.16%
$12.38

Yield: 6.60% due 2032

People owning SLE also tend to own: C CSCO EBAY EEEE FO GE HIT

TheStreet.com Rating: B What is this?

DE
Deere Co
$54.24
-0.29%
$55.04

Yield: 5.10% due 2013 "There were LBO rumors about Deere a while back. That was a great chance to buy a very good credit that doesn't usually get cheap."

People owning DE also tend to own: C CAT FNM FRE GE KO LLY

TheStreet.com Rating: C What is this?

SWY
Safeway Stores In
$22.30
+1.32%
$22.23

"Safeway Stores [SWY] is another name. Periodically, there are leveraged-buyout rumors in the supermarket space, where deals have gotten done."

People owning SWY also tend to own: ADM AIZ ALL CB CNI COP CSC

TheStreet.com Rating: C+ What is this?

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