Eric Green, director of research and senior portfolio manager of $500 million in high yield investments at PENN Capital Management, is looking to the gaming sector with an eye toward Trump Entertainment bonds. "August is typically a slow month for high yield investments, so we haven't had much of a chance to put too many new investments into the portfolio," Green said. The most recent purchase he made was in the 8 1/2% secured Trump note that matures June 2015. The note was bought with new cash and Green sees it as "very solid." Green also added that the pricing on the bond was in the 99 range.
Green cited recent personnel moves at Trump Entertainment as the reason for his enthusiasm about the bonds. "Donald Trump is not part of the management team for gaming anymore. He still owns about 25% of the stock, but the operations are run by others," noted Green. James Perry, former head of Argosy Gaming, is the new ceo and Mark Juliano, ex-Caesar's, is the new president and coo. "With those guys onboard, each of which have huge experience in the gaming industry, we see a lot of good things for Trump and it made the bond a value," noted Green.
Green has also been buying in the wireless sector, particularly Triton PCS and Dobson Communications. He bought Dobson's 10 7/8% with a five-year maturity and Triton's 8 1/2% '13 and 9 3/8% '11. With these investments, PENN is looking for more of a total return and not a coupon clipping. But Green states that when it comes to wireless, that is not the norm for the New Jersey fund manager. "The wireless sector has tightened a bit recently and we are, for the most part, looking for coupon return, not so much total return," he said.
Green's benchmark is the Merrill Lynch High Yield Index. His duration is about four years, because low durations in high yield are not affected nearly as much by interest rates as investment grade is, he said. Green is currently overweight wireless, utilities, gaming/leisure and energy. He is underweight autos, airlines and financials as "they [financials] tend to unravel quickly when things go bad. They've never been good high-yield bonds," Green added.
