Convertibles quiet; Neogenomics rebounds; Shift4, Pinduoduo, Western Digital active

By Abigail W. Adams

Portland, Me., March 30 – It was a quiet day in the convertibles secondary space on Wednesday as the market zeroes in on the final days of the first quarter.

The underlying heaviness in the market during Tuesday’s rally manifested into selling activity on Wednesday as cease-fire negotiations between Russia and the Ukraine failed to produce results.

The Dow Jones industrial average closed the day down 65 points, or 0.19%, the S&P 500 index closed down 0.63%, and the Nasdaq Composite closed down 1.21%.

The Russell 2000 index, which outperformed on Tuesday, led losses on Wednesday and closed down 2.06%.

“There’s a lot of doom and gloom out there,” a source said.

Companies that went public through SPACs were particularly hard hit by the downturn in equities.

However, trading activity remained subdued with $84 million of convertibles trading on the tape a little more than one hour into the session and $438 million about one hour before the market close.

While end-of-quarter clean-up usually sparks some movement in the secondary space, much of the rebalancing may have already been done, a source said.

NeoGenomics Inc.’s convertible notes were on the rebound on Wednesday after getting hammered on Tuesday following the surprise departure of the company’s CEO and warnings of disappointing earnings.

Shift4 Payments Inc.’s 0% convertible notes due 2025 were active with the notes holding onto their outright gains after a strong move the previous session.

Pinduoduo Inc.’s 0% convertible notes due 2025 and Western Digital Corp.’s 1.5% convertible notes due 2024 also maintained their weekly gains in active trading.

NeoGenomics rebounds

NeoGenomics’ convertible notes were on the rebound on Wednesday after plummeting the previous session.

The 1.25% convertible notes due 2025 gained 2 points outright with stock up more than 3.5%.

They were changing hands at 87.5 versus a stock price of $12.96 in the late afternoon.

The notes rose 2 points dollar-neutral from their lows and have now expanded 3 points since Tuesday’s stock move, a source said.

The notes were active on Wednesday with $10 million in reported volume.

NeoGenomics’ 0.25% convertible notes due 2028 were up 2 points outright to 67.

The notes did not hold up as well on hedge.

However, the 0.25% convertible notes were down only 0.5 point dollar-neutral since Tuesday’s session, a source said.

NeoGenomics’ stock traded to a low of $12.30 and a high of $13.22 before closing the day at $12.95, an increase of 3.68%.

Stock rebounded after falling 29% the previous session following the surprise departure of the company’s CEO after what it warned was a disappointing quarter.

The company rescinded its full-year guidance and announced it would miss expectations for the first quarter on Tuesday.

The 1.25% convertible notes traded as low as 84 and the 0.25% convertible notes traded as low as 63 during Tuesday’s session.

Shift4 holds

Shift4’s 0% convertible notes due 2025 held onto their outright gains on Wednesday as stock wavered between gains and losses.

The notes traded up about 0.5 point outright to 108.125 in the late afternoon.

There was about $9 million in reported volume.

Shift4’s stock traded to a high of $66.72 and a low of $63.46 before closing the day at $64.85, a decrease of 0.99%.

The convertible notes jumped 3.5 points outright the previous session as stock rallied more than 7% alongside broader markets.

Active

Several large, liquid issues that have been regulars on the volume charts continued to actively trade on Wednesday.

Pinduoduo’s 0% convertible notes due 2025 remained among the top traded issues in the space.

The 0% notes were also able to hold onto their gains despite a red day for its equity and more regulatory saber rattling from Beijing.

The notes remained wrapped around 89 with the notes carrying a yield of 7.116%, according to a market source.

There was $12 million in reported volume.

The notes have gained about 1 point on the week.

Pinduoduo’s American Depositary Shares traded to a high of $46.99 and a low of $43.06 before closing the day at $43.76, a decrease of 1.22%.

Western Digital’s 1.5% convertible notes due 2024 remained wrapped around 97 in active trading.

The high-premium notes largely trade for the yield, which was 3.197%, according to a market source.

There was $11 million in reported volume.

The 1.5% notes are not equity sensitive and have long been considered a cash alternative trade.

However, Western Digital’s stock was heavy alongside the broader market on Wednesday and closed the day at $50.62, a decrease of 2.45%.

Mentioned in this article:

NeoGenomics Inc. Nasdaq: NEO

Pinduoduo Inc. Nasdaq: PDD

Shift4 Payments Inc. NYSE: FOUR

Western Digital Corp. Nasdaq: WDC

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