HYBRID VIGOR VOL 2 ISSUE 16: One Toke Over the Line

“She packed my bags last night, pre-flight. Zero hour, 9am. And I’m gonna be high as a kite by then.”-Elton John/Bernie Taupin.

We know it must be 4/20 today because the first news story we read was about Jon Corzine, he of the disappearing customer accounts and the seatbelt-light lifestyle, starting a new hedge fund. Not that we would know about such things, but it would seem you’d have to be on some pretty good Panama Red to write that guy a check.

Speaking of the evil weed, we see that Stone(r) Energy is having a good day. Too bad the bond doesn’t make the HOCS 20 list, but with a premium over 100%, the numbers don’t quite add up. That said, when we saw a price of 92 on the bond, we were thinking there were worse ways to get better than 6% these days on less than two-year paper. Alas, it looks like anyone who thinks they can buy the bonds there must be tripping. They probably come closer to 95, more like a 5% yield. Anyway, the stock looks like it could make a new…er…high today.

What else is high? Netflix. As we wrote last week, the name was setting up for a big earnings pop, after which it could be high time for a landmark convertible issue. We’re talking $2 billion, baby. You’d have to smoke some really good Maui Waui to be able to imagine a better candidate for a huge convertible deal than Netflix, especially after last week. How about making a new series about King Kamehameha with some of the proceeds? Or a Cheech and Chong tribute?

If anyone out there wants to pitch a micro-convertible issue, today seems like the right day for Higher One (ONE), based in my alma mater town of New Haven. The company provides disbursement and payment solutions for the higher education industry. Yeah, we know that means college, but hey, we all know what goes on in plenty of dorm rooms. Even though I grew up in Berkeley, I had my first, er, taste in New Haven. And yes, unlike a more famous Bill who attended school in New Haven, I did inhale.

Finally, it’s almost time to say goodbye to the last vestiges of Owens-Illinois 3% bonds. The stock’s been flatlining for a while, but its beer bottles become perfect inhalation devices for, er, tobacco with the help of a Canadian device called the Knockout. A new deal to finance a joint venture, anyone?

(This is the cover letter for the subscription-based weekly Hillside's Hybrid Vigor newsletter. For a complete copy, please contact John Anderson at + 1 (646) 712-9289 x 107).