1 00:00:03,120 --> 00:00:06,519 Speaker 1: Global business news twenty four hours a day at Bloomberg 2 00:00:06,559 --> 00:00:09,640 Speaker 1: dot com, the Radio plus Mobile Act and on your radio. 3 00:00:09,920 --> 00:00:14,240 Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters. 4 00:00:14,320 --> 00:00:18,560 Speaker 1: I'm Charlie Hellott. FedEx numbers are out. FedEx delivering better 5 00:00:18,600 --> 00:00:23,400 Speaker 1: than expected results fourth quarter adjusted EPs three thirty estimates 6 00:00:23,440 --> 00:00:26,200 Speaker 1: on fed X three twenty eight revenue coming in a 7 00:00:26,360 --> 00:00:30,640 Speaker 1: thirteen billion dollars revenue at FedEx estimated fourth quarter revenue 8 00:00:30,720 --> 00:00:34,120 Speaker 1: estimates of twelve point eight billion. Stay with Bloomberg will 9 00:00:34,120 --> 00:00:38,920 Speaker 1: have more on FedEx's report. Stocks higher, SMP five hundred 10 00:00:38,960 --> 00:00:41,519 Speaker 1: index having back to back gains up three tenths of 11 00:00:41,560 --> 00:00:44,640 Speaker 1: one percent today picking up five points to two thousand 12 00:00:44,720 --> 00:00:47,600 Speaker 1: eighty eight. Down Industriels up twenty four a gain of 13 00:00:47,640 --> 00:00:50,320 Speaker 1: one tenth of one percent, and a stack up six again, 14 00:00:50,400 --> 00:00:53,640 Speaker 1: also of one tenth of one percent. The tenure down 15 00:00:53,680 --> 00:00:57,040 Speaker 1: four thirty seconds the old one point seven percent, Gold 16 00:00:57,080 --> 00:01:00,480 Speaker 1: down twenty two eighty ounce twelve sixty nine, a drop 17 00:01:00,520 --> 00:01:04,559 Speaker 1: of one Crude oil West Texas Intermediate down one percent, 18 00:01:04,600 --> 00:01:07,920 Speaker 1: down fifty two cents eighty five for a barrel of 19 00:01:07,959 --> 00:01:12,240 Speaker 1: West Texas Intermediate. I'm Charlie Pellett. That's a Bloomberg business flash. 20 00:01:13,200 --> 00:01:16,680 Speaker 1: You're listening to Taking Stock with bim Box at Kathleen 21 00:01:16,760 --> 00:01:22,839 Speaker 1: Hayes on Bloomberg Radio. Looking for some hybrid vigor. Well, 22 00:01:23,040 --> 00:01:25,280 Speaker 1: you've got to ask our next guest all about it. 23 00:01:25,319 --> 00:01:28,000 Speaker 1: Bill fine Gold is the co founder and managing principle 24 00:01:28,120 --> 00:01:31,840 Speaker 1: for Hillside Advisors. They are based in Valhalla, New York, 25 00:01:31,920 --> 00:01:34,479 Speaker 1: where we find Bill here in the studio with us today. Bill, 26 00:01:34,520 --> 00:01:37,120 Speaker 1: thanks very much for coming in life pleasures always, you 27 00:01:37,200 --> 00:01:40,120 Speaker 1: have a specialty amongst many, but one of them I 28 00:01:40,160 --> 00:01:44,720 Speaker 1: want to focus on is convertibles. What are convertibles and 29 00:01:44,760 --> 00:01:49,160 Speaker 1: how do they work? Convertibles PIM or interest bearing UH 30 00:01:49,480 --> 00:01:53,840 Speaker 1: securities that give the owner the unique option of being 31 00:01:53,880 --> 00:01:58,480 Speaker 1: able to convert into stock if it proves to be 32 00:01:58,800 --> 00:02:03,080 Speaker 1: profitable beneficial. So basically, what it ends up giving you is, 33 00:02:03,560 --> 00:02:05,760 Speaker 1: to a reasonable degree, the best of both worlds. You 34 00:02:05,800 --> 00:02:09,680 Speaker 1: get the benefits of an income bearing security, the cash 35 00:02:09,840 --> 00:02:13,360 Speaker 1: the downside protection plus a very significant portion of the 36 00:02:13,400 --> 00:02:16,880 Speaker 1: stocks upside. It basically saves you the trouble of having 37 00:02:16,880 --> 00:02:20,200 Speaker 1: to decide. So that's why you have devoted your career 38 00:02:20,200 --> 00:02:22,560 Speaker 1: to this, Bill fine Gold, and you're celebrating a very 39 00:02:22,560 --> 00:02:25,960 Speaker 1: important milestone, the one hundredth edition of your newsletter that 40 00:02:26,000 --> 00:02:29,360 Speaker 1: focuses on convertibles. Just give us a thumbnail sketch of 41 00:02:29,360 --> 00:02:33,320 Speaker 1: the history of you and your your company, where where 42 00:02:33,400 --> 00:02:35,240 Speaker 1: you started and where you are now. Thanks so much, 43 00:02:35,280 --> 00:02:39,320 Speaker 1: Kathleen's my pleasure. Um, Well, basically, I got into convertibles 44 00:02:39,320 --> 00:02:41,399 Speaker 1: a little over twenty years ago. As you said, I 45 00:02:41,440 --> 00:02:44,240 Speaker 1: was an option trader at the time, and the place 46 00:02:44,280 --> 00:02:46,160 Speaker 1: I was working used me as a guinea pig to 47 00:02:46,160 --> 00:02:48,800 Speaker 1: see if option traders could also trade these big, ugly 48 00:02:48,880 --> 00:02:52,320 Speaker 1: things called convertible bonds. And it was a big struggle 49 00:02:52,360 --> 00:02:53,959 Speaker 1: the first year, but as they say, you learn a 50 00:02:54,040 --> 00:02:56,920 Speaker 1: lot more by losing them by winning, and I became 51 00:02:57,639 --> 00:03:01,800 Speaker 1: a convertible trader, a convertible animal, as a convertible portfolio manager. 52 00:03:02,080 --> 00:03:04,440 Speaker 1: I've written two books about convertibles. I just fell in 53 00:03:04,440 --> 00:03:07,000 Speaker 1: love with the product, and then a couple of years ago, 54 00:03:07,040 --> 00:03:09,400 Speaker 1: I decided, you know what, it's time to sort of 55 00:03:09,440 --> 00:03:12,400 Speaker 1: start my own thing. And I felt that on the 56 00:03:12,440 --> 00:03:15,600 Speaker 1: one hand, it's it's a product of tremendous value. It's 57 00:03:15,720 --> 00:03:19,160 Speaker 1: goes underappreciated and under the radar a lot of the time, 58 00:03:19,240 --> 00:03:21,960 Speaker 1: but it's people who know about it make great use 59 00:03:22,000 --> 00:03:24,320 Speaker 1: of it. A lot of companies that you wouldn't think 60 00:03:24,360 --> 00:03:27,520 Speaker 1: issue convertible bonds have done it, including Apple. Uh. And 61 00:03:27,560 --> 00:03:29,720 Speaker 1: I said, it's time to really give this product. It's 62 00:03:29,720 --> 00:03:32,079 Speaker 1: it's due, it's stay in court. There really had never 63 00:03:32,120 --> 00:03:35,560 Speaker 1: been an analytical true newsletter dedicated to it, and I 64 00:03:35,640 --> 00:03:38,720 Speaker 1: decided to start one and build my firm around it. 65 00:03:38,840 --> 00:03:41,280 Speaker 1: And we just put out, as you say, our hundred editions. 66 00:03:41,280 --> 00:03:43,360 Speaker 1: So we're very proud of that. But we wonder if 67 00:03:43,400 --> 00:03:45,720 Speaker 1: you could tell us a story about parking your car 68 00:03:45,760 --> 00:03:51,960 Speaker 1: and linked in parking my car and LinkedIn? Um, well, uh, 69 00:03:52,080 --> 00:03:54,640 Speaker 1: linked In, I can tell you about you said, you're 70 00:03:54,720 --> 00:03:56,480 Speaker 1: you're parking your car and you were looking at your 71 00:03:56,480 --> 00:03:59,600 Speaker 1: phone and you noticed that the Microsoft Oh yes, yes, right, 72 00:04:00,200 --> 00:04:02,480 Speaker 1: that's right. I completely forgot. A couple of weeks ago. Yeah, 73 00:04:02,520 --> 00:04:04,560 Speaker 1: I was just pulling into the parking lot of of 74 00:04:05,160 --> 00:04:08,000 Speaker 1: my office building and I saw that Microsoft had bought 75 00:04:08,200 --> 00:04:12,160 Speaker 1: Uh was announced that Microsoft had bought LinkedIn. LinkedIn, Uh 76 00:04:12,480 --> 00:04:14,640 Speaker 1: did a convertible bond about a year or so ago. 77 00:04:14,840 --> 00:04:17,880 Speaker 1: A little uh, maybe a little bit more. And it's 78 00:04:17,920 --> 00:04:20,400 Speaker 1: a really interesting story in how to make good use 79 00:04:20,480 --> 00:04:23,280 Speaker 1: of convertibles and how to sort of get in and out. 80 00:04:23,920 --> 00:04:27,640 Speaker 1: LinkedIn started out the stock was near and all time 81 00:04:27,720 --> 00:04:30,920 Speaker 1: high and low two hundreds. They issued a convertible with 82 00:04:31,000 --> 00:04:33,880 Speaker 1: a conversion price of about two ninety, which is a 83 00:04:34,000 --> 00:04:36,560 Speaker 1: price the stock never actually ended up getting close to. 84 00:04:37,040 --> 00:04:39,159 Speaker 1: So it was a great win for the company was 85 00:04:39,200 --> 00:04:43,359 Speaker 1: able to raise money paying fifty basis point coupon um. 86 00:04:43,440 --> 00:04:46,520 Speaker 1: But uh, in terms of people who invested in linked 87 00:04:46,600 --> 00:04:49,880 Speaker 1: In through the convertible instead of the stock, there was 88 00:04:49,920 --> 00:04:52,320 Speaker 1: also a lot of benefits. For one thing, they probably 89 00:04:52,320 --> 00:04:54,800 Speaker 1: slept a lot better at night. If you own LinkedIn 90 00:04:54,880 --> 00:04:56,720 Speaker 1: when the stock was in the one nineties and then 91 00:04:56,760 --> 00:04:58,480 Speaker 1: had to write it all the way down to a hundred, 92 00:04:58,480 --> 00:05:00,640 Speaker 1: that could not have been a lot of fun. During 93 00:05:00,640 --> 00:05:04,600 Speaker 1: that same time period, the Lincoln convertible went roughly from 94 00:05:04,800 --> 00:05:07,880 Speaker 1: par a hundred cents on the dollar down to about ninety, 95 00:05:07,960 --> 00:05:09,800 Speaker 1: which is not great, but it's a lot better than 96 00:05:09,800 --> 00:05:12,680 Speaker 1: getting cut in half. What's different if I want to, 97 00:05:13,400 --> 00:05:15,120 Speaker 1: you know, invest or have some of this warm me 98 00:05:15,240 --> 00:05:19,559 Speaker 1: in converts convertibles. Uh? Is it harder than watching stocks 99 00:05:19,640 --> 00:05:22,200 Speaker 1: or poses a different what's the key thing that you say, Well, 100 00:05:22,200 --> 00:05:24,000 Speaker 1: that's not exactly a bonder of stock, So what do 101 00:05:24,040 --> 00:05:28,400 Speaker 1: I do? Yeah, well, it look it's um Conceptually, convertibles 102 00:05:28,400 --> 00:05:30,599 Speaker 1: are as simple or as complicated as you choose to 103 00:05:30,640 --> 00:05:33,440 Speaker 1: make them. The market is not nearly as liquid as 104 00:05:33,520 --> 00:05:35,880 Speaker 1: the stock market. You can't just point and click the 105 00:05:35,880 --> 00:05:38,559 Speaker 1: way you can with an account, so it's generally best 106 00:05:38,640 --> 00:05:42,560 Speaker 1: to work with a professional advisor. Uh. I actually am 107 00:05:42,640 --> 00:05:46,360 Speaker 1: very fortunate that my company, UH. When we started out, 108 00:05:46,400 --> 00:05:49,400 Speaker 1: we figured that by publishing our letter we would get 109 00:05:49,440 --> 00:05:51,840 Speaker 1: some clients and hopefully partner up with some of them, 110 00:05:51,880 --> 00:05:55,000 Speaker 1: and that's exactly what's happening. We're now partnering up with 111 00:05:55,080 --> 00:05:59,080 Speaker 1: a firm called Balanced Growth Advisors, which, like Hillside, is 112 00:05:59,160 --> 00:06:01,720 Speaker 1: a young firm with some old grizzled veterans with a 113 00:06:01,800 --> 00:06:04,839 Speaker 1: lot of experience like me, and we're going to help 114 00:06:05,680 --> 00:06:10,480 Speaker 1: both existing and hopefully new clients see the benefit of 115 00:06:10,560 --> 00:06:14,000 Speaker 1: investing in convertibles. It is tricky, a little bit to 116 00:06:14,040 --> 00:06:16,000 Speaker 1: go out on your own if you haven't done it before, 117 00:06:16,360 --> 00:06:19,479 Speaker 1: but conceptually they really are not that hard to understand. 118 00:06:19,839 --> 00:06:23,160 Speaker 1: I wonder if you could use sun Power as an example, 119 00:06:23,200 --> 00:06:25,040 Speaker 1: because I was looking at some of the sun Power 120 00:06:25,640 --> 00:06:30,200 Speaker 1: convertibles and you have to know which one right, I mean, 121 00:06:30,200 --> 00:06:33,000 Speaker 1: you've got one that pays six point seven percent, but 122 00:06:33,040 --> 00:06:35,520 Speaker 1: then you have another one to pay six point one percent. Well, 123 00:06:35,560 --> 00:06:38,240 Speaker 1: there's sun Power. There's a number of companies that that 124 00:06:38,360 --> 00:06:43,080 Speaker 1: we like to call repeat offenders or serial issuers of convertibles, 125 00:06:43,080 --> 00:06:46,719 Speaker 1: and they have convertibles get issued at different times, uh, 126 00:06:46,760 --> 00:06:49,719 Speaker 1: you know, with the stock price at one point maybe 127 00:06:49,880 --> 00:06:53,320 Speaker 1: at all time highs, another time maybe a lot lower. Basically, 128 00:06:53,360 --> 00:06:56,600 Speaker 1: what happens is if a convertible gets issued, SunPower or 129 00:06:56,640 --> 00:06:59,920 Speaker 1: any other company gets issued, and then the stock drop 130 00:07:00,120 --> 00:07:03,359 Speaker 1: down significantly, it's likely to become a more more of 131 00:07:03,360 --> 00:07:06,279 Speaker 1: a yield instrument, more of a pure bond. Whereas if 132 00:07:06,320 --> 00:07:10,320 Speaker 1: a convertible gets issued and then the stock appreciates significantly, 133 00:07:10,400 --> 00:07:13,680 Speaker 1: the convertible becomes more of an equity substitute. That's happened 134 00:07:13,680 --> 00:07:15,960 Speaker 1: with SunPower and a lot of other names. Well, Bill 135 00:07:15,960 --> 00:07:18,360 Speaker 1: found Fine Goal. Thank you so much for joining us again. 136 00:07:18,440 --> 00:07:24,720 Speaker 1: Congratulations on the edition of your Convertible Bond newsletter. Bill 137 00:07:24,880 --> 00:07:28,840 Speaker 1: is co founder and managing principle at Hillside Advisor's l 138 00:07:29,160 --> 00:07:32,960 Speaker 1: l C. I want to thank our technical director, Reggie Basil. 139 00:07:33,000 --> 00:07:36,200 Speaker 1: We want to take thanks Sam Linga, our producer. I'm 140 00:07:36,280 --> 00:07:39,440 Speaker 1: Kathleen Hayes. My co host is Pim Fox. This is 141 00:07:39,440 --> 00:07:47,720 Speaker 1: taking Stock on Bloomberg Radio. Coming up on Bloomberg Law, 142 00:07:47,760 --> 00:07:50,960 Speaker 1: they'll be discussing the latest gun regulation news from the Senate, 143 00:07:51,000 --> 00:07:55,600 Speaker 1: which turned down four gun regulation proposals just last night. 144 00:07:56,160 --> 00:07:57,800 Speaker 1: That's next on Bloomberg Law.