Cover image for The international handbook of convertible securities : a global guide to the convertible market
Title:
The international handbook of convertible securities : a global guide to the convertible market
Author:
Noddings, Thomas C.
Personal Author:
Publication Information:
Chicago : Glenlake Pub. Co. ; New York : AMACOM, [1998]

©1998
Physical Description:
xix, 395 pages : illustrations ; 24 cm
General Note:
Includes index.
Language:
English
ISBN:
9780814404379
Format :
Book

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HG4652 .N64 1998 Adult Non-Fiction Central Closed Stacks
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Summary

Summary

- Aimed at all investors seeking exceptional risk-adjusted returns in the financial markets


Author Notes

Thomas C. Noddings is Founder and Chairman of Noddings Investment Group. A nationally recognized expert in convertibles and listed options, Tom has been on the leading edge of the convertible markets for nearly three decades.
Susan C. Christoph is President and Managing Director of Noddings Investment Group. Her primary responsibility is portfolio management specializing in neutrally hedged convertible securities or convertible arbitrage.
John G. Noddings is Director and Managing Director of Noddings Investment Group. His primary responsibilities include enhancing the firm's proprietary research capabilities as well as the day-to-day management of the firm.


Table of Contents

Acknowledgmentsp. v
List of Tablesp. xv
List of Graphsp. xix
Introductionp. 1
The Convertible Securities Marketp. 2
An Overview of the Handbookp. 2
Convertibles: Asset Class or Alternative Investmentsp. 3
Market Capitalizationp. 5
Section I Equity Warrants
Chapter 1 The U.S. Warrant Universep. 9
Backgroundp. 9
Warrant Opportunities for Today's Investorsp. 10
Information Sourcesp. 12
Companies Having Actively Traded Warrantsp. 12
Company Profile Analysisp. 13
The Typical Warrant's Underlying Common Stockp. 14
Chapter 2 Warrant Terms and Special Provisionsp. 25
Backgroundp. 25
Basic Warrant Termsp. 25
Special Provisionsp. 27
Registration of Warrantsp. 30
Income Tax Considerationsp. 31
Chapter 3 Warrant Valuation and Investment Strategiesp. 33
Backgroundp. 33
Factors Affecting Warrant Pricingp. 33
Normal-Value Curvesp. 35
Warrant Leveragep. 38
Risk-Reward Relationship of Normally Priced Warrantsp. 39
Risk-Reward Relationship of Undervalued Warrantsp. 41
Callable Warrantsp. 41
Finding Undervalued Warrantsp. 42
Hedging Undervalued Warrantsp. 43
Hedging Overvalued Warrantsp. 46
A Few Words of Cautionp. 46
Chapter 4 International Warrantsp. 55
Backgroundp. 55
International Warrant Market Overviewp. 55
Section II Convertible Bonds and Preferred Stocks
Chapter 5 The U.S. Convertible Bond Universep. 63
Backgroundp. 63
Information Sourcesp. 64
Companies Having Actively Traded Convertible Bondsp. 64
Company Analysisp. 66
The Typical Convertible Bond's Underlying Common Stockp. 67
Chapter 6 The U.S. Convertible Preferred Stock Universep. 81
Backgroundp. 81
Information Sourcesp. 81
Companies Having Actively Traded Convertible Preferredsp. 82
Company Analysisp. 82
The Typical Convertible Preferred's Underlying Common Stockp. 83
Structured Convertible Securitiesp. 83
Chapter 7 Convertible Bond Valuationp. 95
Backgroundp. 95
The New-Issue Convertible Securities Marketp. 96
Anatomy of a New-Issue Convertible Bondp. 97
New-Issue Risk-Reward Analysisp. 100
Why New-Issue Convertible Bonds are Undervaluedp. 102
The Secondary Trading Market for Convertible Securitiesp. 102
Commonly Used Measurements for Valuing Convertiblesp. 103
Convertible Bonds Versus Convertible Preferredsp. 104
Chapter 8 U.S. Convertible Securities Indexesp. 111
Backgroundp. 111
Convertible Securities Indexesp. 111
Convertible Index Performancep. 117
Chapter 9 International Convertible Securitiesp. 149
Backgroundp. 149
Information Sourcesp. 149
Euroconvertible Marketp. 150
Japanp. 150
Asia Excluding Japan (Asia Ex-Japan)p. 152
Europep. 158
Rest of the Americasp. 162
Africap. 162
Global Convertible Security Indexesp. 162
Section III Convertible Bond Hedging Strategies
Chapter 10 Hedging Convertible Bonds with Common Stockp. 175
Backgroundp. 175
An Attractive Convertible Bond Hedge Candidatep. 176
Bullish Hedgesp. 177
Hedging on Marginp. 178
Neutral and Bearish Hedgesp. 178
The Short Interest Rebatep. 179
Convertible Bond Portfolios Hedged by Underlying Stocksp. 179
Risks of Hedgingp. 180
Convertible Hedge Fundsp. 182
Chapter 11 Hedging Convertible Bonds with Equity Optionsp. 193
Backgroundp. 193
The Universe of Convertible Bonds with Listed Stock Optionsp. 193
Puts and Calls Versus Short Sale of Stockp. 194
Hedging Undervalued Convertible Bonds with Long Put Optionsp. 195
Hedging Undervalued Convertible Bonds with Short Call Optionsp. 196
Hedging Undervalued Convertible Bonds with Both Puts and Callsp. 196
Chapter 12 Hedging Convertible Bond Portfolios with Index Optionsp. 203
Backgroundp. 203
Index Option Strategiesp. 204
Hedging Convertible Bond Portfolios with SandP 500 Index Optionsp. 205
Hedging Convertible Bond Portfolios with Russell 2000 Index Optionsp. 206
Finding Inefficiently Priced Index Optionsp. 207
Section IV Portfolio Management
Chapter 13 Convertible Asset Classesp. 215
Backgroundp. 215
Conventional Asset Classesp. 215
Convertible Classificationsp. 217
The Five Convertible Asset Classesp. 218
A Closer Look at the Five Convertible Asset Classesp. 219
Chapter 14 Performance Evaluationp. 237
Backgroundp. 237
Nine Bond/Stock Market Scenariosp. 237
Convertible Bonds as a Stock Market Alternativep. 238
Stock Market Divergencesp. 239
Convertible Bonds as a Balanced Approach Alternativep. 240
Bond Market Divergencesp. 241
Some Final Thoughtsp. 241
Appendices
Appendix A Review and Analysis of Formulas for Warrants and Convertible Bondsp. 253
Equity Risksp. 253
Debt Risksp. 256
Appendix B The Noddings Managed Warrant Indexesp. 259
Backgroundp. 259
Index Constructionp. 260
Why Track Two Indexesp. 261
Current Listing of Warrants Held in the Indexesp. 262
Performance Datap. 262
A Comparative Stock Indexp. 262
Performance Evaluationp. 263
Appendix C The Noddings Managed Convertible Bond Indexesp. 269
Backgroundp. 269
Classifications by Capitalization and Quality Ratingsp. 270
Security Selectionp. 270
Security Weightingp. 271
Security Pricingp. 271
Market Benchmarksp. 271
The Noddings Medium-Cap Convertible Bond Indexp. 272
Convertible Bonds Versus Their Underlying Common Stocksp. 273
Appendix D Convertible Fundsp. 297
Backgroundp. 297
Information Sourcesp. 297
Convertible Funds are Diverse Investmentsp. 298
Closed-End Fundsp. 298
Mutual Fundsp. 298
Why Buy Convertible Fundsp. 298
Appendix E Basic Equity Option Strategiesp. 303
Backgroundp. 303
Bullish Strategiesp. 303
Neutral Strategiesp. 304
Bearish Strategiesp. 304
Straddles and Spreadsp. 304
Appendix F U.S. Convertible Securities Sub-Indexesp. 315
Glossaryp. 357
Indexp. 381