Convertible Screen
Convertibles Screen: Top Convertibles on Timely Stocks in Timely Industries - November 23, 2011
Value Line’s proprietary Industry Rank and the Convertible Rank are at least partially driven by Value Line’s stock Timeliness Rank. Although the three are intertwined to some degree, it is interesting to overlay all three ranks to try and cull out “the best of the best,” in the convertible space. Some companies with convertibles that pass this tough screen include AngloGold Ashanti (AU), Pioneer Natural Resources (PXD), and Titan International (TWI).
Convertible Screen
Convertibles Screen: High Coupon Convertibles - November 3, 2011
Convertible bonds offer an interesting middle ground between a stock and a bond, and thus, an interesting mix of risk and reward. For investors seeking a high level of income, high-yielding convertibles might be a good option. However, a high yield often means increased risk. NorthStar Realty (NRF), Geomet (GMET), and Network Equipment (NWK) all have high coupon convertibles.
Convertible Screen
Convertibles Screen: Convertibles in Top-Ranked Industries - October 13, 2011
Some investors prefer to focus on just the highest-ranked companies from the highest-ranked industries. There is nothing wrong with this approach. However, there are often bargains to be found in highly ranked industries if one is willing to consider companies that are not as highly ranked themselves. BPZ Resources (BPZ), Molycorp (MCP), and Molina Healthcare (MOH) are examples of just such situations.
Commentary
Warrant Hedging: A Timely Strategy
The exceptional leverage provided by warrants makes them ideal candidates for hedging. A warrant hedge consists of a long position in a warrant and a short position in the underlying common stock.
Convertible Highlight
Convertibles Screen: Convertibles in Top Ranked Industries - July 11, 2011
Some investors prefer to focus on just the highest ranked stocks from the most highly ranked industries. There is nothing wrong with this approach. However, there are often bargains to be found in highly ranked industries if one is willing to consider stocks where the individual rank is not as high. Micron Technology (MU), Kinross Gold (KGC), and James River Coal (JRCC) are potential examples of just such situations.
Investor Tools
Commonly Asked Questions about Convertibles
New investors in convertible security may not understand the complexity of this asset class and become frustrated. We provide answers to some of the most commonly asked questions and hope new investors will better understand convertibles.
Convertibles as an Asset Class
Investors, searching for safer havens, are pulling out of stocks and investing in bonds and government securities. Indeed, the Dow Jones Bond Average gained 0.8% in January, while our All Convertibles Total Return Index grew 1.8%. Even the government is considering the option of buying “convertible securities from financial institutions,” with bailout money (according to an article in the January 21st Wall Street Journal). Because of their hybrid nature, convertibles could be the ideal investment for investors “hooked” on stocks, as we go through this recession. A convertible has an investment value (a bond value); it pays income, which is generally higher than that of the stock; and the warrant portion gives holders a call option on the underlying stock when equity markets perk up again. And, they are more stable than stocks.
A Convertibles Primer
Convertibles are a niche investment that are, unfortunately, on the outskirts of most investors’ radar screens. A quick primer, however, might help change that.
What is a Convertible Bond?
Convertible bonds represent a debt of the issuing corporation and are commonly designated by the rate of interest paid and the year of maturity. The price at which a convertible is traded is quoted as a percentage of $1,000 (or par).
Why Convertibles Often Carry Less Risk than Common Stocks
Risk typically increases with potential return. There are, however, some investments that historically have provided larger than expected returns in proportion to the risk of the securities involved. Convertibles fall into this category.