Convertible Securities Portfolio Management Expert Reveals His Top Picks in Three Yield Categories

Wall Street Transcript

67 WALL STREET, New York - December 27, 2012 - The Wall Street Transcript has just published its Best Investment Strategy Interviews of 2012 offering a timely review of the sector to serious investors and industry executives. This special feature contains expert investing commentary through in-depth interviews with highly experienced Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Investment Strategies - Large Cap Investing - Investing in Emerging Markets - Investing in Energy - Value Investing - Downside Protection With Upside Participation - Macroeconomic Trends

Companies include: Gilead Sciences Inc. (GILD), SanDisk Corp. (SNDK), Wells Fargo & Company (WFC), Genesee & Wyoming Inc. (GWR) and many others.

In the following excerpt from the Best Investment Strategy Interviews of 2012 Report, a portfolio manager specializing in convertible securities discusses his investing methodology and top picks for investors:

TWST: Can you give us a few examples of your specific holdings and tell us what you like about each stock?

Mr. Rogers: One thing I would like to add is, in convertibles, every convertible is unique. They all have different conversion premiums, different credit qualities and a lot of unique features. I like to say convertibles are like fingerprints, each one is different. One thing we do at Laffer Investments is use convertibles with varying degrees of equity sensitivity. Some are very equity sensitive, some are considered total return, and others are considered yield alternative or "busted" convertibles. Busted convertibles occur when there is not a lot of equity sensitivity. So I use the convertibles that fall in those three categories: equity alternative, total-return alternative and yield alternative. In particular, a really good equity-sensitive name I like is Gilead (GILD). They are probably one of the most dominant pharmaceutical companies in the HIV area. They also just had really good data come out for their hepatitis C vaccine. So I like it because it's a really good, solid equity story; there are good growth prospects for the common stock; it's an A- credit; and it has about 1% current yield but the common stock pays no dividend, so you're picking up 100 basis points in yield over the common stock. And again, it's a really equity-sensitive security.

A total-return alternative security that I like in the portfolio is SanDisk (SNDK). Again, it's a good, solid fundamental story. They are a market leader in NAND memory in different forms. They've got good exposure through mobile devices, tablet computers and smartphones; a good solid balance sheet; a good equity story; the ability to pick up a 135 basis points in yield over the common stock; and you're going to participate in about 50% of the upside move in the common and about 40% of the downside.

Another name that I like in the portfolio - just from a yield standpoint -

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