Convertible Strategy

The Convertible Strategy is a bottom up, value driven discipline that utilizes convertible bonds and convertible preferred stocks to seek out opportunities for maximizing total return. The portfolio construction process starts by segmenting the convertible universe by credit quality. The strategy aims to maintain an average credit rating of BBB.

A two-pronged analysis is conducted on potential candidates. The first prong of the analysis focuses on the convertible security and evaluates its classification (yield alternative, total-return alternative, and equity alternative), horizon analysis, theoretical value, and investment value, along with external research analysis. The second prong focuses on the underlying common stock associated with the convertible security and stresses analysis of the company fundamentals generated by internal research as well as external research.

The investment process uses a disciplined approach in analyzing changes to any combination of the following areas: company earnings, convertible valuation, credit erosion, equity valuation, and convertible valuation. Portfolios typically contain between 30 to 50 securities. Risk is actively managed by the investment team in relation to portfolio exposure by company, security, sector as well as other metrics specific to convertible securities.

Strategy Leader: J. Stanley Rogers, Jr.
Strategy Team Member: Jason P. Weaver, CFA®

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