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: In general, how would you describe your investment philosophy, and what makes it unique – what do you bring to the table that is different from your peers?
Mr. Rogers: There are not many of us that specialize in convertible securities. What makes me different from my peers is that I focus predominately on the investment-grade portion of the convertible universe. We're approximately 80% investment grade, give or take. I'm a bottom-up fundamental guy, so I do a lot of work on the underlying common stock, then I do quantitative work on the convertible. I merge the two analyses - fundamental and quantitative - and that's how I make my buy and sell decisions. What we try to do with convertibles is to build a portfolio that we think is going to provide really attractive risk-adjusted returns for the clients. We're focused on, again, investment-grade, high-quality companies with a solid fundamental story where the convertible is going to provide the investor upside participation, yet they're going to get the downside protection in the event the stock-price declines.
TWST: You focus primarily on convertible securities. Tell us what you like about that asset class and what makes convertible securities an attractive investment in the current economic and market environment.
Mr. Rogers: Well, at the end of the day, we don't really know where the markets are going to be six months from now or a year from now. There are a lot of headwinds in the market. You know, we have the fiscal cliff, which is obviously all over the headlines. You have the European economic situation, sovereign-debt issues with Italy and the peripheral countries. Here at home, we have some economic malaise that obviously feeds off the fiscal cliff concern to some extent. So there are a lot of headwinds in the market, and at the end of the day we don't know what's going to happen. But potentially, if they're resolved in any form or fashion in a positive way, then those headwinds can certainly turn into tailwinds. But again, we don't know when, if or how those are going to be resolved.
But the beauty of convertibles is that you get paid to wait because a lot of times the convertibles have a higher payout than the underlying common stock. Again, if they do get resolved in a positive manner, then having that allocation to convertibles is going to give you most of the upside of the common stock. If the market rallies and the underlying equity is going to go up, that's going to increase the price of the convertible. On the other hand, if you still have these headwinds going forward and you have a rough market in 2013, then you're going to get the downside protection that the convertible offers the investor. So I think it allows the investor to sleep a little bit better at night, knowing that their allocation in convertibles is going to get the equity participation, the enhanced income stream and the downside protection...
For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
- Investment & Company Information
- convertible securities