Taplin, Canida, & Habacht, a Miami, Fla.-based money manager with some $4.5 billion in taxable fixed-income under management, has been selling five- to 10-year bonds of financial and supermarket companies in order to buy 10- to 30-year new corporate issues. Portfolio manager William Canida says the firm has been buying new retail food paper and new and secondary auto company debt. He says the firm has traded some $300 million in the past month, and may look to swap another $150 million if it continues to see new issuance in triple-B names in cyclical sectors such as autos, which must come at a heavy concession in the current tight credit environment. Canida says there is nothing on the new issue calendar that the firm is eyeing aggressively at the moment, and he says it has probably finished adding to autos in the secondary market.
Recent purchases include General Motors Acceptance Corp. 8% notes of '31 (A2/BBB+), a new issue which came at 277 basis points over Treasuries, and Ford Motor Co. 7.45%s of '31 (A3/BBB+), which traded at 352 over Treasuries in the secondary market last week. The firm also picked up Tyson Foods 8 1/4% notes of '11 (Baa3/BBB), recently issued at 375 basis points over Treasuries, swapping out of shorter maturity paper from Albertson's (Baa1/BBB+) and Kroger (Baa3/BBB-) that traded in the mid-100s. Bonds of financial companies the money manager has sold include Donaldson, Lufkin & Jenrette 8% notes of '05 (A1/AA-), and Bank of America 7.875% notes of '05 (Aa2/A+). It has also sold bonds of Lehman Brothers (A2/A), CIT (A/A3) and Household Finance (A2/A).
Taplin, Canida, & Habacht has a large corporate-only fund, and therefore has a 69% weighting to corporates. It also invests 19% in mortgage-backed securities, 10% in U.S. government (mostly Treasury) bonds and has 2% in cash. Its dedicated corporate fund has a duration of 5.8 years, slightly long its bogey, the 5.5-year Lehman Brothers corporate index.
