“Opportunity” in a mortgage bond

Do you know anyone about to die who wants to make a fast buck on the way out the door? I just saw an interesting opportunity to buy some Countrywide Financial 5% bonds due 12/15/09 at only $88.33. (A buyer would pay $883.30 for the bond, which returns $1,000 at maturity.)

I wouldn't want to own these Countrywide bonds very long, since CFC may or may not be around for much longer. It's supposed to be the only mortgage lender who survives...but what if they don't? The bonds are selling at 88 cents on the dollar, but apparently they have a "death put," where the holder can put the bonds back to the issuer (for 100 cents on the dollar) if the holder dies.

That's a quick 13% (plus accrued interest!), and all you have to do is kick the bucket!

Anyone who thinks that Countrywide will last longer than them, and admittedly it's a horse race, ought to take a look at these!


Douglas B. May, CFA, is President of May-Investments, LLC and author of Investment Heresies.

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