Morning Commentary: SmileDirectClub convertible notes in focus, trade up as stock pops

By Abigail W. Adams

Portland, Me., Sept. 17 – The convertibles secondary space saw decent volume early in Friday’s session on a red day for equities.

The Dow Jones industrial average was down 199 points, or 0.57%, the S&P 500 index was down 0.77%, the Nasdaq Composite was off 0.68% and the Russell 2000 index was down 0.35% shortly before 11 a.m. ET.

While there was almost $100 million in reported volume about one hour into the session, there was a wide breadth to the names in play with few seeing concentrated activity.

SmileDirectClub Inc.’s 0% convertible notes due 2026 were the most actively traded name in the space with the notes making gains on an outright basis as stock popped.

The 0% convertible notes were up 4 points outright as stock popped more than 10% due to a short-squeeze.

The 0% convertible notes were changing hands at 75.75 versus a stock price of $7.41 shortly before 11 a.m. ET.

There was about $8 million in reported volume.

SmileDirectClub’s stock was changing hands at $6.80, an increase of 13.33% shortly before 11 a.m. ET.

The company has been the target of a coordinated short-squeeze in recent sessions.

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