Level 3 reported a first-quarter profit of US$119 million as sales more than tripled. Its shares, which closed Friday at US$5.97, have climbed 22 percent so far this year.
Warren Buffett has also bought US$98.3 million of junk bonds in Amazon.com, the world's largest Internet retailer. The Seattle-based company had a US$10.1 million first-quarter loss.
Bondholders have more protections than shareholders, typically the last to be paid back in a bankruptcy, said Jerry Dodson, who helps manage US$800 million as president of Parnassus Investments in San Francisco.
He said he views companies with negative equity as "deep waters" and avoids them for his clients. Still, many of them are cheap enough that a high-risk investor might try buying several in hopes at least one scores a big recovery, he said.
"If you have enough money to buy, say, 15 of them and it's not money you'll need to live on, be my guest," Dodson said.
"Some of them will double or triple when they bounce back -- if they're still alive."
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