September 22, 2017, Quick Update: Peanut Convertible Debentures Power Rankings

This is the 15th update of the Peanut Convertible Debentures Power Rankings.  Similar to the last update, consider this particular iteration a "skinny update", without the usual market commentary, as life continues to be very busy.  This update is current to September 22, 2017 and we'll likely get back to regular long-form updates in October.      

For a summary of the rankings of our entire convertible debenture coverage universe including the quantitative model prices of, and notes on each issue we follow, click on the table below to view it larger.

The Top-5 picks in the Power Rankings are also described with a little more detail in the corresponding section below.

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

Important: the Peanut Power Rankings are provided as information and opinions only and are not intended to be a provision of investment advice or a recommendation of any investment action in any form.  As with all 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 (September 22, 2017)

• (Oops), they did it again: the Bank of Canada raised the the overnight target rate another 25 basis points, to 1.0%, on September 6.  Experts are divided as to whether there'll be another increase by year's end. 
• For a change, the Canadian equity markets have actually outperformed American markets in the last three weeks.  Since our last update, the S&P/TSX Composite is up 1.73%, the S&P 500 is up 1.04%, and the NASDAQ has been relatively flat at -0.13%.
• We have a new #1 and one re-entry in our Peanut Top-5 this update.  See below for more details.

Peanut Power Rankings Top-5 Convertible Debentures (September 22, 2017)

1. American Hotel Income Properties REIT LP, 5.00% 30-June-2022, Series 'U' Convertible Debentures. (Ticker: HOT.DB.U), (Last update's ranking: #2). The bottom line: there are economic, interest rate, and currency risks with this one, but at these levels, it's a bargain and we've gotten aboard this train.  Insiders think it's a bargain too.  On September 21, the hotel REIT announced in a press release that insiders had bought a total of 225,620 units in the last five weeks.  I take this as a good sign. We're long HOT.DB.U at US$98.00.     


2. Tricon Capital, 5.75% 31-March-2022, Series 'U' Extendible US Dollar Convertible Debentures. (Ticker: TCN.DB.U), (Previous ranking: #1).  Bottom line: organic growth in TCN, scale in its US single family rental portfolio, good management, a decent US-dollar denominated coupon, and a reasonable valuation suggest that it's an opportunity to get into TCN.DB.U, if you aren't already in it.  Risks: a stronger Canadian dollar and higher interest rates.  TCN seems to have been dragged down with the rest of the REITs and real estate opco's on the TSX. The beauty of quality convertible debentures like this one is we wait and clip coupons while we wait for the common shares to go up. We've been long TCN.DB.U since it debuted at US$100.00.  


3. DHX Media, 5.875% 30-September-2024, Convertible Debentures. (Presumed ticker: DHX.DB), (Previous ranking: #3). The bottom line: DHX is a unique media content company that would probably make a nice acquisition target for someone else (Disney? Rogers? Bell? Shaw?), Peanuts is a once-in-generation type of asset with valuable IP, and the terms of the convertible debenture itself are excellent.  If you've been reading this blog for awhile, you know that this issue was issued as a private placement and is not yet trading.  However, finally(!) we have some news on when it will begin trading - around or shortly after September 30.  We have no position in DHX.DB, but would be interested in acquiring one once it becomes available for trading on the TSX.  For the purposes of our modelling, we have nominally priced the convertible debenture at $100.00 (par), but if and when it hits the market, it'll probably trade considerably higher than $100.00 because it'd be way undervalued there.  Note we have a position in DHX's Series B common shares (ticker: DHX.B). 


4. Cargojet, 4.65% 31-December-2021, Series 'C' Convertible Debentures. (Ticker: CJT.DB.C), (Last update's ranking: #3).  The bottom line: Cargojet continues to have a superb market position in an area of long-term, secular growth, and even at current prices, it's not a bad entry point for CJT.DB.C. Cargojet shares have been very resilient the last few weeks.  We've been long CJT.DB.C since it debuted at $100.00.    


5. Innergex Renewable Energy, 4.25% 15-August-2020, Series 'A' Convertible Debentures. (Ticker: INE.DB.A), (Last week's ranking: #6). Bottom line: renewable energy is a good theme for any portfolio, and Innergex is a solid company in this space.  Since our last update, Innergex common shares briefly traded in-the-money for INE.DB.A before falling back to current levels.  We're long INE.DB.A at $102.75.

Picture of the Day


Twenty houses at the end of a sugarbeet field. Hjarup, Sweden. Copyright © 2009 Felix Choo / dingobear photography.  Photo is available for licensing at Alamy Images. All rights reserved. Photo may not be reproduced without permission. 

Drop Us a Line

Thank you for reading this blog.  As always, if you have any comments or questions about convertible debentures or this blog, please leave us a comment at the bottom of the page or email us at convertibledebs@gmail.com.  

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September 1, 2017, Quick Update: Peanut Convertible Debentures Power Rankings

This is the 14th update of the Peanut Convertible Debentures Power Rankings.  Like last week, consider this particular iteration a "skinny update", without the usual market commentary, as life continues to be very busy.  This update is current to September 1, 2017 and we'll likely get back to regular long-form updates by October.      

For a summary of the rankings of our entire convertible debenture coverage universe including the quantitative model prices of, and notes on each issue we follow, click on the table below to view it larger.

The Top-5 picks in the Power Rankings are also described with a little more detail in the corresponding section below.

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

Important: the Peanut Power Rankings are provided as information and opinions only and are not intended to be a provision of investment advice or a recommendation of any investment action in any form.  As with all 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 (September 4, 2017)

• Interest rates!  Canadian GDP printed an annual 4.5% GDP growth figure for Q2, which means there's a possibility that Poloz, Wilkins, and the Bank of Canada gang may raise rates as soon as this week.  
• Canadian equity markets continue to lag US markets, which go up despite the ridiculous reality TV show going on in DC. 
• Canadian banks had terrific quarterly earnings (again).  If you subscribe to the theory that financials tend to lead, it might be up to the banks again to lead the Canadian market out of the desert. 
• That said, we are getting to that part in the year where investors get a bit squirrely before winter ... and Octobers can traditionally be downright spooky.  Diversify and be cautious, as always.
• No new additions or deletions to the Peanut Top-5 this week, but there were a few positional changes withing the Top-5.

Peanut Power Rankings Top-5 Convertible Debentures (September 1, 2017)

1.  Tricon Capital, 5.75% 31-March-2022, Series 'U' Extendible US Dollar Convertible Debentures. (Ticker: TCN.DB.U), (Previous ranking: #1).  Bottom line: organic growth in TCN, scale in its US single family rental portfolio, good management, a decent US-dollar denominated coupon, and a reasonable valuation suggest that it's an opportunity to get into TCN.DB.U, if you aren't already in it.  Risks: a stronger Canadian dollar and higher interest rates.  TCN seems to have been dragged down with the rest of the REITs and real estate opco's on the TSX. We've been long TCN.DB.U since it debuted at US$100.00.  


2. American Hotel Income Properties REIT LP, 5.00% 30-June-2022, Series 'U' Convertible Debentures. (Presumed ticker: HOT.DB.U), (Last update's ranking: #4). The bottom line: there are economic and interest rate (and stronger Canadian dollar!) risks with this one, but quite frankly, at these prices, HOT.DB.U is too cheap to ignore.  And it got even cheaper this week. We've long HOT.DB.U at US$98.00.    


3. DHX Media, 5.875% 30-September-2024, Convertible Debentures. (Presumed ticker: DHX.DB), (Previous ranking: #2). The bottom line: DHX is a unique media content company that would probably makes a nice acquisition target for someone else (Disney? Rogers? Bell? Shaw?), Peanuts is a once-in-generation type of asset with valuable IP, and the terms of the convertible debenture itself are excellent.  However, it is important to know that the issue, which was issued as a private placement, is not yet trading - and at this point, may not with any liquidity even after regulatory hold periods expire at the end of September. We have no position in DHX.DB, but would be interested in acquiring one once (if?) it becomes available for trading on the TSX.  For the purposes of our modelling, we have nominally priced the convertible debenture at $100.00 (par), but if and when it hits the market, it'll probably trade considerably higher than $100.00 because it'd be way undervalued there.  Note we have a position in DHX's Series B common shares (ticker: DHX.B).  Snoopy dance! 


4. Cargojet, 4.65% 31-December-2021, Series 'C' Convertible Debentures. (Ticker: CJT.DB.C), (Last update's ranking: #3).  The bottom line: Cargojet continues to have a superb market position in an area of long-term, secular growth, and even at current prices, it's not a bad entry point for CJT.DB.C. We've been long CJT.DB.C since it debuted at $100.00.    


5. Rogers Sugar, 5.00% 31-December-2024, Sixth Series (Series 'E') Extendible Convertible Debentures. (Ticker: RSI.DB.E), (Previous ranking: #5). The bottom line: the new acquired maple business provides a shot in the arm for a long-time sleepy company, though trade, consumer sentiment, and growth risks remain in Rogers' traditional sugar business.  The market was decidedly tepid on RSI's Q2, but the stock has stabilized a bit this week.  We have no current position in RSI.DB.E but like it, and would consider acquiring one at the right price.   

Picture of the Day


The Northern California life. San Francisco, California. Copyright © 2016 Felix Choo / dingobear photography.  Photo is available for licensing from Alamy Images. All rights reserved. Photo may not be reproduced without permission. 

Drop Us a Line

Thank you for reading this blog.  As always, if you have any comments or questions about convertible debentures or this blog, please leave us a comment at the bottom of the page or email us at convertibledebs@gmail.com.  

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