This week marks the one-year anniversary of Hybrid Vigor. We commemorate the momentous point in Hillside Advisors’ young history with a review of our iconic (at least in our own minds) Ugly 20. While we think our HOCS methodology ultimately contributes more to the community—no matter how ugly certain names are, convertible managers
are paid to invest client money in the best names they can find—the Ugly 20 nonetheless serves a unique purpose in warning investors about creeping risks. The chart we’ve been including in each week’s Ugly 20 review should provide a quick snapshot of market tone. A picture can indeed be worth a thousand words.

If you’re a fan of the Ugly 20 and our HARP scoring system but haven’t yet embraced the brighter side with HOCS, which identifies more attractive convertibles with an emphasis on favorable risk-reward profiles, keep in mind that HARP, flipped on its head, is one of the key inputs we use in calculating HOCS.

More generally, we’d like to take this opportunity to thank everyone who’s read Hybrid Vigor, and especially those who have helped us keep the lights on here at Hillside by subscribing this year. We know first-hand that people are getting squeezed everywhere. Many are struggling to keep working in the asset class we all have come to love, hate and live with over the last several decades.

We know the convertible market will always be a pretty small corner of the capital-raising world, but we’ll always believe it plays a role more critical than its size would suggest. Speaking of size, we still think the convertible market could and should be a multiple of its current size. That belief keeps us plugging away as self-appointed ambassadors for the asset class.

Please keep your comments coming. Your insights, corrections, criticism and encouragement all help us make Hybrid Vigor a better publication. Whether it’s Hybrid Vigor or something else, we think this underappreciated asset class deserves a regular, analytical, creative, and unbiased periodical. We’re honored and humbled to be leading the way, and we hope we’ll be able to continue.

(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).