Convertible Securities: Appealing in this Uncertain Market

The market has changed a lot since our last look at convertible bonds about six months ago. Not only has the stock market been shaken by the potential fall-out from the Covid-19 stay-at-home orders, but also interest rates have fallen sharply. The market has shown resilience, but risks clearly remain as the economic recovery may not happen as quickly as investors expect. Convertible bonds and convertible preferred stocks can provide investors with possible participation in future gains in the underlying common stock, along with attractive yields, while providing some measure […]

Bank Stocks on Sale

With the sharp slowdown in the economy, bank stocks have declined significantly, and, unlike the broad S&P 500 Index, have not recovered much of their lost value.  Year-to-date, our universe of 180 bank stocks has declined 31%, compared to the 6% decline in the broad market. Driving the weak shares are concerns over higher credit losses, particularly in commercial real estate and small/medium business loans.  Banks have begun to increase their reserves, but the extent of further losses is not fully known.  A new accounting rule (Current Expected Credit Losses, […]