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| Jayme Wiggins |
Jayme Wiggins, portfolio manager at Intrepid Capital Management, a Jacksonville Beach, Fla.-based firm with $550 million in assets under management, is looking for high-yield bonds that offer predictable cash flow. He cites Speedway Motor Sports and Itron, an electronic meter reading company, as two examples of his strategy. "Speedway has really become profitable since around 2001, when NASCAR started getting into their television contract and Itron is a good buy because they have been doing some really interesting stuff with electronic meter reading," Wiggins said. Speedway carries a BB- rating with a maturity of 2013, while Itron is rated B with a 2012 maturity. "These both have maturities that are little longer than we generally go, but with the cash flow they have and their general value, it was a good buy for us," he added. "Pickings have been a little slim as of late due to the fact that a lot of these high-yield companies have refinanced their debt and leave only longer maturity stuff for us," noted Wiggins. His benchmark is the Merrill Lynch High Yield Master Two, and his duration is about 3.3 years.
In order to counter the lack of viable high-yield investments, Wiggins has grabbed some investment-grade bonds. "One deal that we bought into recently was General Mills, it was a solid investment-grade credit for us that is due in about a year-and-a-half. It gives us some extra yield until we can find better high-yield options," he said.
Although Wiggins does not worry about sector allocation, choosing to go wherever he finds the best deals, he has recently chosen "consumer-staple" products. "We are not materially overweight in anything, but on the other hand we are staying away from homebuilder, steel and energy sectors. We don't really see a lot of value in companies that rely on the kindness of the market to bail them out," Wiggins concluded.
