Bombardier Inc (B) (BBD.B.TO)

7.35% Dec 2026 bond? This is a speculative credit. The company is rated BB, the higher end of the junk bond market, but it is still junk. Company has a lot of leverage. Have done a great job of refinancing in the current marketplace, but this is going to be volatile because it is long. However, you are getting fairly compensated for the risk you are taking

The market hates uncertainty and they had a problem with the ‘C’ series engine, but it is bottoming out so he likes it here. The risk rewards is pretty attractive.

Has a very, very leveraged balance sheet. You just don’t know how much longer this recent engine problem is going to push off the decision of airlines to make a purchase of the C series plane. This is putting further strain on their balance sheet.

Has never owned this, partly because he thinks it is too levered to Québec Inc politically. Besides that, they have not executed very well. Made lots of promises, but did not deliver on them. There are better companies that are executing better.

Ranks in the middle of his pack right now. Have 2 separate divisions. There has recently been some talk about them separating into a rail division and a plane manufacturing division. The C series is going to have a lot of news around it. Until he sees accelerated earnings growth in both divisions, he is not prepared to invest in it.

If you own, $3.50 would be a good place to put a Stop in. Some of the indicators are still rolling down. You could wait another month or 2, or into the fall in order to see how it acts. The longer-term moving average is still trending down. Between $3.30-$3.50 would be a good place to have risk/reward in your favour.

He bought this at around $4. Looking at a big picture of 10 years, it was below $4 in 2009 and got down to almost $2, but every time it dipped below $4, it has been a good area to buy in the last couple of years. He would be in an accumulation mode at this time. In the next few years, you will probably see this is a $6-$7 stock.

Would you be a buyer between $3 and $3.50? Also, do you think there is any possibility of bankruptcy over the C series? Sold his holdings because of the C series and the delays. The news in the past 10 days has been bad. Their largest buyer right now is waffling. Russia has also announced that they are waffling about their deal. Regarding bankruptcy, they have miles to go. Have tremendous government support which is important. Doesn’t like the way the balance sheet has been sullied. Still on his Watch List.

7.35% bond maturing in 2026. This company is going through all sorts of problems trying to get the C series launched. He does not think it is going to be a failure, but will probably have to do more discounting to get more sales. It not only has the C series, but also has the regional jet, business jet and a good train division. This company is rated just below investment grade, but you have about 6.5% yield to maturity and you are going out 12 years. It’s a full 420 basis points credit spread over Canada’s. Thinks the credit spread is excessive for their high quality businesses and in 3-4 years they will probably be regaining investment grade credit status. An investment grade bond does not trade anywhere close to 420 basis points. You are getting paid for the credit risks you are taking on.

This stock is very much dependent on the C series. The latest kick in the pants came from Air Canada (AC.B-T) which indicated they would not be a player. Investors should not take this as a terminal setback as the company is progressing on the order book. In due course he expects it will get to 300. However, until he sees further confirmation of this, forget it.

Strong enough financial position to consider making an offer for the rail division of Alstom? Thinks it is somewhat unlikely. Will have to see what happens with Alstom regarding General Electric (GE-N) or Siemens (SI-N). He doesn’t think they need it except for small selective assets. The rail division has not been a problem. What has been an issue is their aerospace. However, if the C series is successful, it could be a big driver for them.

It is a difficult business. Had a lot of troubles with execution. It gets more competitive as every day goes by and there could be margin contraction.

Everyone wants to wait until the ‘C’ series gets sales. It’s off the ground and they will get the sales. You almost pay nothing for the transportation division. The core products are selling. You buy it when everyone hates it.

There is a lot of optimism about the C series. This is a name he has stayed away from over the years. Has been disappointing constantly and has a lot of leverage on its balance sheet. This is not an easy business.

Stock is in a short-term down cycle and is having some problems. In a boring range of approximately $3.78-$4.28. You could take a guess at this and take on the small position with the hope that it goes back up to the $4.80 level. If it goes below $3.80, he would definitely exit.