May 20, 2022 – A selloff market that investors have been enduring in recent weeks presents rare buying opportunities for equities whose prices have sunk to what I call “bargain levels”. One rare opportunity is a fund run by Legg Mason Partners named Brandywine Global Income Opportunity Fund, with ticker symbol BWG (NYSE).
Its primary investment objective is to provide current income, with 80 percent of its capital invested in safe, global fixed-income securities. A secondary goal is the investment of its other 20 percent of assets for capital appreciation.
The funds are also invested typically in these sectors of given countries named below: collateralized mortgage obligations (CMOs), other financial assets, energy, healthcare, industrials, information technology, materials, real estate, and telecom.
Among the countries that the management of this equity fund invests in, besides the U.S. are: Brazil, Colombia, Indonesia, Mexico, South Africa, and the United Kingdom.
Brandywine Global has a decent balance sheet. Its total liabilities amount to around $126 million, but its net shareholder equity is nearly twice that amount at $221 million. In 2020 and 2021, management bought back shares, reducing the outstanding share number from 21 million to less than 17 million shares, with the book value per share being just $13.15.
But you can buy the shares at a steep discount of over 66 percent for just $8.73 a share as of market close yesterday, yielding you 12+ percent.
Other important fundamentals: its earnings per share is 75 cents for each share priced at $8.73 (up from $8.61 four days ago on May 16), so its price-to-earnings ratio is just 11.69. Had you bought shares of BWG about nine months ago on Sept. 02, 2021, you would have paid $13.09 a share.
So today, BWG is at a bargain price of $8.73, and you get a $1.08 annual dividend, payable to you each month with 9 cents per share. This is an annual yield of 12.73%.
