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Calamos Investments' CEO says convertible valuations favorable for long-term investors
By Jennifer Lanning Drey
Portland, Ore., Oct. 27 - Calamos Investments' chief executive officer, John Calamos, said the company sees opportunities for investors with a longer-term perspective to take advantage of convertible valuations, which are at their lowest point in decades.
During a Monday conference call, Calamos said the firm has seen market volatility cause option values to decline to zero, meaning in many cases convertibles are trading below their investment value.
"What could happen here is if the markets calm down and return to any semblance of normalcy, you could see that option value gain in here without the stocks increasing in value," he said.
"And of course, if the stocks were to increase then you'd have a double plus there."
The CEO said the firm has seen similar situations in the past but never with such a large drop in valuations. However, he said higher valuations have historically returned in two to three quarters.
"The market just cannot look beyond this current crisis, so growth has been taken out of the market completely, setting up very extreme valuations, prices we haven't seen for a very, very long time," Calamos said.
He attributed the pricing to forced selling, particularly by hedge funds.
As previously reported, earlier this month Calamos announced the reopening of all share classes of its Calamos Convertible Fund, and select institutional convertible strategies will also be reopened.
"We're anxious to get some new money to take advantage of these opportunities," Calamos said.
The fund is getting a good response so far, he said.
Calamos Investments is a Naperville, Ill., diversified investment firm.
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