LinkedIn's Convertible Bond Plays By The Rules
Tuesday, February 9, 2016
Back in the dot-com era, the Wall Street Journal columnist Holman Jenkins wrote that what makes convertibles so fascinating is the way they straddle the gap between the “risk-reward” pricing model used for bonds and the “what-the-heck” pricing model. Many convertible issuers—and many more compani... .. read more..
Twitter Convertibles: Safer And Smarter?
Tuesday, February 2, 2016
Few social-media companies—or any companies, for that matter—have been more maddening to investors than Twitter. You can hardly turn on a broadcast or pick up a newspaper (how old-school) without reading about a celebrity’s controversial tweet. The 140-character limit has redefined communication,... .. read more..
Yelp Should Have Issued A Convertible Last Year. Told You So.
Tuesday, July 28, 2015
Sixteen months ago in this space I suggested that Yelp should take advantage of its high-flying stock price to issue a convertible bond. It didn’t. The stock was around $83 then. It headed south. As I write this, after the company’s abysmal post-close guidance on Tuesday, the shares go for [...] .. read more..
Today's Shake Shack Move Should Put A Convertible Bond On The Menu
Tuesday, July 7, 2015
It’s a little perplexing why a Morgan Stanley analyst waited until today to downgrade Shake Shack to the equivalent of a “sell” rating based on the stock’s egregious valuation. After all—and yes, this is sort of a community victory lap—what kept him from making the call when the stock was [...] .. read more..
Riding In An Uber Convertible
Tuesday, June 30, 2015
Once again, Uber is raising money with a convertible bond. Earlier in the year, the company raised about $1.6 billion through a “pre-IPO” convertible deal. One feature of the convertible-bond market is the prevalence of “repeat offenders,” a market term for companies that regularly use convertibl... .. read more..
Drive Up To Shake Shack In A Convertible?
Friday, May 29, 2015
What’s the significance of May 29th? For fans of Shake Shack, it means only two months remain until the post-IPO lockup period ends and insiders are free to sell shares. If you don’t think those shares will hit the market like a ton of bricks, I’ve got a burger joint [...] .. read more..
How Bill Ackman Might Make Even More Using Herbalife's Convertibles
Tuesday, January 6, 2015
He surely won’t do it, because it would go against his argument that Herbalife is a fraud that deserves to be put out of business. But there’s a trade out there that would let Bill Ackman keep making money on his winning short while, paradoxically, benefiting if the absolute worst [...] .. read more..
Twitter's Convertible Bonds: More Rating Agency Irrelevance
Friday, November 14, 2014
For some reason Standard & Poor’s unsolicited (Twitter didn’t pay for it) “junk” BB- rating of Twitter’s recent convertible bond offering has been portrayed as negative news—or as newsworthy. It’s neither. Twitter has two features that don’t fit well in the rating agency model—or the model of... .. read more..
LinkedIn Connects With A Big New Convertible Bond. Is Netflix Tuned In?
Wednesday, November 5, 2014
Mark Twain supposedly once said that history may not repeat itself, but it rhymes. We like rhymes because they satisfy our need for resolution and closure. And in an interesting way, the convertible bond market is getting closure today. At least that’s how I see it. Back in February, Netflix cam... .. read more..
The Lesson Of GTAT: Raise Money When You Can
Tuesday, October 7, 2014
You know the stuff of Greek tragedy. It features a hero who means well (isn’t it tiresome to hear people tell you that they mean well), achieves apparent greatness, then crashes and burns because of some mix of pride (hubris) and misjudgment (hamartia). Consider Tom Gutierrez, the head of suddenl... .. read more..
A Pair Of Convertible Bonds Worth More Than 140 Characters
Thursday, September 11, 2014
Today is, above all, a day of remembrance. But it’s also a watershed event for Twitter and the convertible-bond market. If you’ve been following this space, you know that I’ve been advising issuers to take advantage of a generational opportunity to raise a lot of money cheaply and effectively thr... .. read more..
What Is Herbalife's Convertible Bond Price Saying?
Friday, August 8, 2014
My firm publishes a newsletter called Hybrid Vigor about the convertible bond market, named after the concept of hybrid vigor—the breeding of different gene pools to get offspring with the best attributes of both. The offspring, the theory goes, will be stronger and more vigorous than either of t... .. read more..
Shrinkage in Prologis Convertible Bonds: It's All About Price
Tuesday, July 22, 2014
Just over three months ago I wrote a piece here suggesting that instead of putting their cash in the convertible bonds of storage giant Prologis, investors would be better off storing it under their mattresses. Since then, the bonds have dropped about 3% while accruing a little less than a point ... .. read more..
This Convertible Bond Is Going To Break Really Bad
Thursday, July 10, 2014
RPM International makes specialty chemicals, coatings and sealants. The kind of stuff you might find in your favorite hardware store. The kind of stuff Walter White might have mixed to blow apart a lock or an enemy’s face. Even the world’s most famous fictional meth cook, though, could not have c... .. read more..
A New Sandisk Flash Convertible To Finance Fusion?
Monday, June 16, 2014
Don’t be surprised to see a new billion-plus dollar convertible bond from Sandisk in the very near future. The flash memory leader announced its acquisition of Fusion IO for about $1.1 billion this morning. On the related conference call, management insisted it was comfortable using existing cas... .. read more..
Insulet Pumps Out Another Winning Convertible Deal
Thursday, June 5, 2014
Investment bankers typically face a lot of obstacles getting companies to issue convertible bonds. They get a lot of strange looks from financial officers and directors. What are these things, anyway? Are they stocks or bonds? Is it a floor wax or a dessert topping? What’s up with the oddball [...] .. read more..
Tesla Convertible: Saving $250 Million Here And There Adds Up
Thursday, May 8, 2014
Followers of this space know I’ve been urging companies with (once upon a time) high-flying stocks to monetize the hype by issuing convertible bonds. I’ve focused on the astonishing lack of action in the face of opportunity. And now, with the momentum stocks down 30%, 40%, 50%, this bird h... .. read more..
Convertible Shoulda Woulda Coulda: The Yelp You Hear May Be Their Own
Wednesday, May 7, 2014
You don’t often make friends for I-told-you-so’s, especially in the markets where it’s easy to be wrong for a million reasons. So I try to refrain. But this one has just been, well, Yelping at me for a while. When I wrote about six weeks ago that Yelp should issue a convertible [...] .. read more..
Maybe This Is Why Broadsoft Didn't Issue A New Convertible
Tuesday, May 6, 2014
Last month I suggested—as strongly as I could—that Broadsoft should issue a new convertible bond given the valuation of its existing one. I explained that over the life of the existing bond, while the underlying stock had fallen (as of April) by about 25%, the convertible had actually gained by... .. read more..
Amazon Better Get Back To The Future With A New Convertible: A Tribute To Joy...
Friday, April 25, 2014
Has Wall Street finally called bull-you—know-what on Amazon.com? Few things in finance feel worse than getting run over by a momentum train. The price makes no sense to you, but you’re overwhelmed by so-called momentum investors engaged in a high-stakes game of chicken. They dare you to sell and ... .. read more..
The New Citrix Convertible: Saving Millions In The Cloud From Both Sides Now
Friday, April 25, 2014
Citrix Systems, which did cloud computing before there was cloud computing, just issued a big convertible bond. The company got a great deal. If you’re surprised by that, you haven’t been paying attention. But it’s worth taking a minute to see how Citrix and companies like it are seizing on [...] .. read more..
Why Not Just Buy The Stock? Ask Genco Convertible Holders
Wednesday, April 23, 2014
The convertible bond market has a lot of songs to sing, and if you know the tunes, you might join in. One of them—actually sung by people who don’t like won’t touch convertibles at any price—goes something like this: “Why would I buy the convertible? If I like the stock, I just [...] .. read more..
Storing Your Cash In This Type Of Convertible? The Mattress Might Be Better
Thursday, April 17, 2014
I like to call convertible bonds issued by companies with so-called investment-grade credits “converts for people who hate converts.” A kinder, gentler way to describe them might be “bonds convertible into stocks that already have convertible-like properties.” Make no mistake: stocks are not onl... .. read more..
Looking For Yield? Here's A Convertible Prospect
Thursday, April 10, 2014
If you’ve been following my posts, you know that the convertible market offers a once-in-a-generation opportunity to raise capital on the extraordinarily attractive terms. I can understand why companies that used to rely on convertibles for financing—the chipmaker Xilinx comes to mind—have turne... .. read more..
The Broadsoft Convertible Today: Let The Buyer Beware, Let The Issuer Be Bold
Tuesday, April 1, 2014
In my last piece I discussed the scarcity of investment-grade convertible bonds and those bonds’ tendency to trade at unattractive prices. I cited the bonds of Lam Research—if the stock gains 25% over the next two years, convertible holders will actually lose money, because of the excessi... .. read more..
Holders Of These Convertibles Are Lams For The Slaughter
Thursday, March 27, 2014
A wise trader once said, “There are no bad bonds, only bad prices.” If you’ve been following this space, you know that I’ve been trying to encourage companies to take advantage of a historic opportunity to issue convertible bonds on favorable terms. The opportunity has come about for the same re... .. read more..
Another Convertible Appeal To Mark Zuckerberg
Wednesday, March 26, 2014
Dear Mark, I tried a couple of weeks ago to get you to issue the biggest convertible bond ever to help you buy companies. My editors got a little upset when I jokingly suggested you buy my new company at the kind of valuation you’re paying for hot new technologies, many [...] .. read more..
HomeAway Convertible Bond Is Right Here, Right Now
Tuesday, March 25, 2014
Last night HomeAway, an online broker for vacation rentals, announced a $350 million convertible bond. Price talk centers around a minimal coupon of 0.25% and a conversion premium of 30% for a five-year deal. While these aren’t Tesla terms, they still are highly favorable to the issuer while offe... .. read more..
Issue A Convertible Now Or Yelp Later: Plus, A History Lesson
Monday, March 24, 2014
Yelp is one of the hottest stories on the San Francisco social network circuit. It’s hard to imagine a more useful mobile app. I know there have been more than a few times when tapping into Yelp on my phone or tablet has made me look like I know my [...] .. read more..
Netflix Convertible: After The Fall, It's Still Not Too Late
Monday, March 24, 2014
One of my first posts in this space suggested that Netflix, basking in the warmth of a strong earnings report that catapulted the stock about 17% in a single day, should monetize that gain by issuing a new convertible bond. Instead the company tapped the straight-debt market for some of [...] .. read more..