Sunday, December 8, 2019

Peanut Convertible Debentures Power Rankings (as at December 6, 2019)
Follow your star. Jakriborg, HjΓ€rup, Sweden.  Copyright © 2009. Felix Choo / dingobear photography.  Photo may not be reproduced without permission. 

Hi.  It's been quite awhile since we've updated our Peanut Convertible Debentures Power Rankings.  Thanks for your patience.  If you're keeping score at home, this is the 46th update of the Peanut Power Rankings; this version takes into account available data current to December 6, 2019.  Thank you for continuing to read and support the Canadian Convertible Debentures Project.

Some of you have written in and asked why updates have become fewer and far between in recent months, and that's a fair question.  The excuse is pretty extreme pressures in the day job (I don't mean the photography day job), and those don't look like they're going to subside anytime soon given what we're dealing with here.  I really can't get into much detail beyond that, but when it comes to other people's hard-earned retirement savings, I think those of us who are entrusted to work in the best interests of beneficiaries certainly face plenty of uphill challenges in a day and age where power,  greed, and political expediency are allowed - or even encouraged - to run rampant.  It's not right.  And going forward, it needs to get better.  That's what I ask for this Christmas and holiday season.

Ok. I know I'm getting pretty abstract and far away from convertible debentures on this soapbox, so I'll stop now. But thanks for listening.  Now let's get back to our regularly scheduled programming.  

To review and for those new around here, let's do a quick summary of what the Peanut Power Rankings are all about. In a nutshell, the rankings are based on two main considerations: (1) a proprietary quantitative model I developed to help myself determine the "fair value" of a particular convertible debenture issue and (2) a qualitative judgment (based solely on my own humble opinion) on the particular issue, issuer, economic environment, interest rates, and other factors.

For this version of the Peanut Power Rankings, please click on the table below to read it larger.  If you still find it too small to read, please download the PNG file, which then can be zoomed to a size that you prefer.  For those who are looking to obtain a PDF or Excel version, please email us for more information; they can be made available for a small fee (let's say $5 but I won't complain if you want to pay more :)

For more background information on the Peanut Power Rankings, please see our FAQs by clicking here.

Important!: Like everything else on this website, content here is provided as information and opinions only and not intended to be a provision of investment advice or a recommendation of any investment action in any form. There is no guarantee, warranty, representation, or other assurance whatsoever on any of the information provided.  Information and opinions reflect our views as of the date provided, but may (and do!) change without notice.  Investments made in convertible debentures are exposed to the risk of financial losses, and as with all disseminated information concerning investments, it is highly recommended that an individual consult with a qualified investment professional before making any investment decisions.

Market Commentary - Quick Points (December 6, 2019)
  • Wow, what a year 2019 has been thus far for equity investors.  Convertible debentures haven't done too shabby either, with double-digit gains buoyed by low interest rates and a rising stock market. 
  • However, if you've been reading us for awhile, you know that we've been cautious all along because of all of the uncertainty out there.  Right now, I think it's safe to say that the market expects that rates will remain low and that there will be a positive outcome from the US-China trade disputes.  I can agree with the former, but the latter is no slam dunk.  
  • A so-called Phase One trade deal between the world's two powers is still not done, and I maintain that the downside risks from a trade hiccup is (potentially much) higher than the upside risk from a trade deal. 
  • And of course, next year is a Presidential election year in the US, which means unpredictable policy directions and tweets as the incumbent tries to hang on to power.  
  • Yields have bounced off their recent troughs but remain nevertheless low, and it's noteworthy that the previous yield curve inversion that we had in the US in late summer has now reversed itself.  Indeed, it seems immediate US recession clouds have thinned out for now, but one is still possible 12 to 18 months out especially if continued unforced errors in the form of trade and tariffs emanate from the current administration.
  • Closer to home in Canada, we have a slowing economy, a retiring central bank chief, minority federal Parliament, and provincial leaders (you know which ones) that are fanning the flames of regional grievances for their own political gain.  This is potentially a troubling slate to work with, but because the Bank of Canada has been among the slowest of all the major central banks to cut rates, there is capacity here to implement some monetary policy if needed.  
  • As always, stay diversified, focus on good credit quality issues and, where possible, keep focused on the long-term.

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