Paul Gardner, CFA Yellow Pages 8% Conv Debt 2022 YPG.DB-T TOP PICK Nov 29, 2017

(Convertible 8% 2022) Yellow is struggling and reorganizing, but still makes money and has free cash flow. It's a bond, not equity story. They're actively paying down debt. He's confident they'll pay it all down. They slashed their costs with free cash flow annualized around $80 million. 75% of their growth comes from digital hits, so revenues are decaying which is a concern. Their margins are still around 28%.

A restructuring story. Retiring debt so quickly, in 2 years, only the convertibles will be left. Getting a high yield in a less risky way. Doesn’t want to own the stock, just own the debt. Yield is 8%.

(A Top Pick Nov 22/18, Up 14%)Convertible debenture He's suggested this before. He was a senior debt holder with YPG was restructuring. YPG still has very high free cash flow and EBITDA still hovers around 35%. They transition to digital which was costly. They've since reduced that cost structure, paid down most of that debt and have free cash flow. What's left are convertible debentures, so he's front of the line to get paid.

(A Top Pick Mar 20/19, Up 12%) Now that Yellow Pages has reorganized and stabilized their business, there is very little debt. This convertible debt is almost risk-free now. Their business has not necessarily done great, it creates free cash flow (with a 32% margin) and pays an 8% yield. He expects the bonds to be called in the next year.