HYBRID VIGOR: VOL 3 ISSUE 20 "99 Hybrid Vigors on the Wall"

Donald Trump, he of the big, beautiful tax returns we haven’t seen and cries of “YUUUGE,” is the presumptive nominee for President from the Grand Old Party. A horse named Exaggerator just ran away with the Preakness. In that vein, I am tempted to announce that we are proud to be on the verge of our one millionth issue of Hybrid Vigor.

You knew I couldn’t help myself with Exaggerator. Careful readers of Hybrid Vigor should have used our advice to pair him with Cherry Wine for a nice exacta. If you didn’t, you have nobody to blame but yourself.

Ok, so we’re not verging on our millionth issue. But we are very proud to say that today’s issue is number 99 since we began this enterprise in July of 2014, and that we will commemorate Memorial Day 2016 with our hundredth edition.  It feels like that’s a pretty magic number—it shows, hopefully, that despite the challenges facing a new business, especially amidst a tough time for the convertibles business, Hybrid Vigor is now a key part of the convertible landscape. As Walter White might have said, “You’re ------- right we’re proud.” We’ll let you fill in the blank.

This week George Lynch discusses two high-yield credits, Avon and Genworth, while Jeff Alton takes a new look at our old contrary friend Iconix. We also happily report on a week in which the HOCS measures acted more like their old selves and less like the struggling little bonds of early 2016.

One of the interesting things about convertibles is they’re often not what people expect. Investors who’ve been misinformed by unscrupulous marketers (and we’ve known, and worked with, a few) expect the bonds to hold like rocks when stocks are collapsing. They don’t, of course. But they gut it out for the long run better than almost all other related asset classes. Similarly, the Belmont Stakes, the longest by far of the Triple Crown races, always appeals to long-winded, slow horses that can seemingly run any distance, just not that fast. But the race usually goes to a horse that can control the race from near the lead.  This year that horse is probably Nyquist. But Exaggerator has more early speed than he gets credit for. Depending on how jockey Kent Desormeaux uses it, we could see the two of them hook up early in the race and fight a long way. It promises to be fun—just as the eventual resurgence of convertible issuance (we did get some issuance last week, a nice little sign) will be fun for those who make it to the other side.

Finally, we want to thank those who have filled out our survey.  If you have not done so already, we are including the link once again.  We can’t stress how helpful it is to get your feedback as it helps us to focus on those areas that our readers find most helpful.  In appreciation for filling out the survey, we will send you a sleeve of personal golf balls!  Please go to https://www.surveymonkey.com/r/MRRYTGTfor the survey.

(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).