high returns, take a closer look at the company that is issuing the bond. High-yield bonds are more vulnerable to default than investment-grade bonds. Taking the time to research companies can reveal hidden gems and exposed concealed weaknesses. A competitive company with a solid management and a sound business and financial strategy will likely prosper-even through its credit rating may not be high. A struggling company with weak management and a reluctance to adapt to changing business situations is obviously a much higher risk. For example, at the company Trimark they evaluate each of their companies for equity funds and bonds. They also use the bottom-up long term investing approach to search for bonds that are undervalued by the market and then they will purchase and hold the bonds until they reach their value. Their are several steps that can be taken by anyone who wishes to buy high-yield bonds:Meet the ManagementOne of the most critical steps in the process is visiting the company and meeting the management team. Asking questions and listening to their answers is important when deciding whether or not to invest. All of the records should be examined, this will conclude how the company reaches their projected goal annually. It is very easy for a company to put together a flashy annual report.Company AnalysisConducting an in-depth analysis of the company, is the second most important step in choosing a company to invest within. Looking at a companies profitability and evaluating their assets is the overall objective in the company analysis. To test these two objectives, one can change the key variables to see, for example, what would happen to key credit if the gas prices rose to an all time high. Another important question that a company should ask, is the company a low-cost operator? If the company produces a product at al lower cost relative to its peers in the industry, it will probably survive and prosper.Industry Analysis...
