Jim Brilliant, CFA, CIO, and portfolio manager for the CM Advisors Fixed Income Fund (CMFIX), was interviewed by Forbes’ own Wallace Forbes on August 10, 2017. The title of the interview was “Loading Up On Bonds Of Companies That Have Gotten Priced As If They're Never Going To Survive”
The following are several quotes from Jim during the interview:
- “We’re not only looking at the income component, but we’re also looking at the appreciation of the bond itself.”
- “As a total return bond fund, we have the flexibility to invest in treasuries and corporates and we can invest in any maturity or any credit quality. By having this flexibility, it allows us to move up and down the yield curve and then be opportunistic when credit spreads widen.”
- “…we dig into the fundamentals of the company to determine whether what’s weighing on the bond is a temporary issue or whether it’s something much more dramatic. And when we can assess that it’s a temporary issue, and that over time the fundamentals may improve, which may improve cash flows, those improved cash flows eventually may lead to a narrowing of credit spreads and an upgrade of the bonds in many cases.”
- “Even in some of these markets where the investors don’t have a whole lot of confidence, there are opportunities to find mispriced assets.”
- “There is a perception that on-shore shale production will be able to satisfy the needs of our oil demand into the future. But if you really dig into the oil market it’s clear that shale — as wonderful as it is, cannot satisfy the overall demands of oil going forward.”
- “The offshore drillers have gotten priced as if they’re never going to survive. But we feel that’s overly pessimistic and, therefore, we’ve bought many of those bonds.”
You can read the entire interview on www.forbes.com.
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