HYBRID VIGOR: VOL 3 ISSUE 19 "To Your Health!"

If this morning is any indication, we’re about to see a lot of stuff going on in the world of health care, particularly in biotech. That should add some spice to what’s been a dismal year in convertibles to date.

In today’s rather packed issue, we talk briefly about both Anacor’s surprising takeout by Pfizer as well as the disappointing outcome for Trevena’s heart drug and the not-so-bad-all-things-considered outcome for the buy/write we examined last week.  Also, Kathy Schick provides a new look at Horizon Pharmaceuticals. To your health!

But it’s not all health care, not by a long shot.  Dennis Dowden, our resident high-yield guru, chimes in with earnings updates on two names (Belden and Transdigm) he’s previously discussed in this space.  And we bring back our On-Deck Circle feature for a look at Fabrinet, a company that could do a lot worse than issuing a convertible into today’s market.

Did somebody say long shot? With the exception of Exaggerator, who ran a fine second to favored Nyquist in the Derby, everyone else trying to unseat the king will be exactly that.  For my part, I was very disappointed that Mohaymen, who was compromised by an uncharacteristically poor start in the Derby (I know, stuff happens) and ran on to be a very respectable fourth, did not take another swing at Nyquist here. I still believe in that little grey colt and think he’ll be very tough when he returns this summer. 

Nyquist may have to come from a little further behind in the Preakness than he did in the Derby, but he has given no indication of a problem with that strategy. Indeed, he may be better that way.  If you want to look past the obvious Exaggerator (whose daddy Curlin won the Preakness) for a horse that might win if Nyquist stumbles, consider Cherry Wine. He’s probably not good enough but each race he’s run has been better than the previous one.  And getting better—be it a horse or a market—is what it’s all about, right?

(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).