chk

[Groty]

Convert arb guys are the dominate players in the convertible market. By definition, they buy the convertible bonds and short the stock. When a new convert offering is announced, some guys with fast fingers immediately short the issuer's stock to front run the convert arb guys.

Convert arb guys love the current market environment. They prosper and thrive during periods of extreme equity volatility, as the increase in vol juices the value of the embedded options in the convert. And because the straight debt markets are in turmoil, convert buyers demand improved pricing for new deals brought to market. If the current climate continues, they will outperform nearly all other hund fund strategies.