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7/30/2019 Convertible Securities Today_by John Calamos
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Convertible Securities in Today's Ma
John P. Calamos Sr.
CIO Calamos Investments
7/30/2019 Convertible Securities Today_by John Calamos
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Agenda
Convertible Issuance
Why companies issue converts?
Convertible Strategies
Where do convertibles fit in the asset allocation?
Convertible Arb What is the fate of convertible arb?
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Panelists
Moderator:
John P. Calamos
Sr.,
Chairman, CEO and Chief Investment Officer, CalaManagement
Panelists:
Jason Lee, Managing Director, Goldman, Sachs & Co.
Michael OGrady, Managing Director of Investment Banking, Bank of
America Merrill Lynch
Michael Rosen, Principal and Chief Investment Officer, AngelesInvestment Advisors LLC
Christopher Zafiriou, CFA, Senior Investment Analyst, Investments of
The Pew Charitable Trusts
7/30/2019 Convertible Securities Today_by John Calamos
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Convertible issuers: quality co.s & respected brands
Technology
Health care
Energy
Materials
Consumer Discretionary
Consumer Staples
Telecom
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Convertible Issuance
Why companies issue convertibles
Cost
Lowers the cost of Debt
Lowers the cost of equity
Capital Structure Considerations
Less restrictive covenants
Ability to refinance when debt spreads are high
Serial offerings allow growth while controlling debt/equity r
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Companies that issued convertibles in 2009
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Why companies issue convertibles?
Discussion
7/30/2019 Convertible Securities Today_by John Calamos
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Convertible strategies
Separate asset class
Alternative equity
Defensive equity
Alternative fixed income
Enhanced fixed income
Relative value
Convertible arbitrage
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Convertibles and asset allocation as of 3/31/09
Hybrid
Characteristics
Fixed Income
Characteristics
CONVERT
IBLE
BOND
PRICE
Investment Value (Bond)
YIELDALTERNATIVES
TOTAL RETURNALTERNATIVES
EQUITY ALTERNATIVES
3/1/2000 18.9% 27.8% 53.3%
12/31/2002 68.5% 27.6% 3.9%
3/31/2009 61.5% 23.3% 15.2%
Convertible Fair Value Price Track
Conve
rsionVal
ue(St
ock)
CURRENT STOCK PRICE
Equity
CharacteristicsDistressed
7/30/2019 Convertible Securities Today_by John Calamos
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Convertible strategies and asset allocation
Discussion
7/30/2019 Convertible Securities Today_by John Calamos
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Convertible hedging
Convertible ARB
2008
Leveraged or unleveraged?
Valuation of Convertible
Fair Value
Delta neutral hedging
7/30/2019 Convertible Securities Today_by John Calamos
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What is the fate of convertible arb?
Bewilderedhedge
fundmanagers
Conveand
Wheres the driver?Levered or Rookie
Convert Arb Managers
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Convertible hedging
Discussion
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Thank you
John P. Calamos
Chairman, CEO and Co-CIO, Calamos Investments
Jason Lee
Managing Director, Goldman, Sachs & Co.
Michael OGradyManaging Director of Investment Banking, Bank of America Merrill Ly
Michael Rosen
Principal and Chief Investment Officer, Angeles Investment Advisors Christopher Zafiriou, CFA
Senior Investment Analyst, Investments of The Pew Charitable Trus
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Source: International Monetary Fund.