Convertible Securities Roles

I’m considering moving from the fixed income space to a convertible securities role. It seems like a really interesting position but somewhat of a niche role. Thoughts, experiences?

No comments but good luck!

Depending on the size of your position, it can be a tricky area to navigate. If it’s for your own personal portfolio (assuming we’re not talking ohai-level assets) you can definitely find some that can help with downside protection and offer some good upside returns. If you’re talking about institutional money, convertible issuance has been pretty sparse since 2008 and while you can still participate in the market, it’s hard to find meaningful positions on a consistent basis.

Beware of deep value traps. That’s where converts seem most attractive but can quickly lead to bad results.

Edit: I thought I was in Investments and not careers. I didn’t read your comment as a role change. Thought you were buying them for yourself.

Well, since you seem to be the only one with any knowledge of the space, given the sparse issuance and thin market, is this going to strand me in no man’s land?

The way we and other asset managers out size (generally) cover convertibles is by sector. So the bank analyst looks at BAC vs a BAC convert and determines which portfolios either are fit for. We don’t have a dedicated convertible analyst. Given that we do have the resources and choose not to, I’d be wary. However, if you’re working at a boutique that specializes in products that utilize a good deal of convertibles, maybe it makes sense. Like if you have a product that just uses convertibles and you’re choosing just from that universe, it could make sense.

Would you be “the” convertible guy? No sector specialty and just looking at convertibles (and maybe try to lump preferreds in there)? That could be interesting but I think it’d be hard to do across sectors. You’d essentially have to be knowledgeable across all industries. Seems tough but maybe I’m just hardwired differently because I’m used to seeing converts being covered by sector analysts.

It’s definitely an interesting market though. And, if you can pitch synthetic convertibles it really opens up the markets. But, again, if you’re just looking at the convertible market and not common shares, you may miss opportunities to build your own convertibles.

Is this for trading or issuing convertible bonds? I don’t know what desk this is, but the convertible bonds sell side people in my company seem to have a cushy life. There is regular business, as all new deals go through the same cartel of dealers.

Would be for buy side analyst. The role focuses on a specific sector and is within a fund that only trades convertibles. I’m somewhat on the fence it just seems like a very niche role with an unclear exit strategy so who knows.

Seems like good experience to have, there’s got to be some special situation funds that invest in those.

maybe look up the biggest issues and see which funds own them or google “cfa convertable bond LinkedIn” and see where those people work.

exits opps… I’m sure you could find some mezz funds with flexible mandates that could leverage your convertible experience. definitely niche but $ is good

I don’t think it would hurt your exit opportunities. If anything I think it could help. Your still doing fundamental research on companies, and you expand your knowledge into valuing another type of security. You still have to be able to value the stock if you’re going to determine the value of a convert.

Seems like it’d be more rigorous training than just a stock analyst. Sounds fun to me, but I’m more of the data analysis type

Appreciate the input, it actually does really interest me, adding the extra layer of complexity. My other problem and probably the biggest reservation I have so far in the process is that I’d be switching coverage industries and tbh I just really, really love the subject content of my current space. But that said change can be good and I am definitely interested, so I’ll let you know if things develop from here.

It probably depends on the firm, and how sophisticated or prestigious they are though.

Agree, I appreciate all the input guys, kind of weird being on the asking side of things.

oh yesss, I know this. Convertibles like dogecoin during capital raise. Very good. Much monies!

lol