Small portfolio note

The universe of Canadian convertible debentures is ever-shrinking – there are 92 issues remaining, and three of them (Atlantic Power, Great Canadian, Yellow Pages) will be going in a month, and there are a few more that are obviously slated for rollover/maturity in the coming months after.

I’ve recently unloaded my last convertible debenture today. It is a statement on this particular market that there isn’t much point in putting capital into this when returns are so weak in relation to the apparent riches available in the equity market (of course, this could be a sign that equities are topping out!).

Junk bond yields are also at lows (ETFs include JNK, HYG). An interesting hedge here is longing puts on these in anticipation of some credit action.

My only material debt instruments I currently own are the Gran Colombia Gold notes (TSX: GCM.NT.U) which continue to happily slide into maturity (and if the underlying corporation has any financial sense whatsoever, will be called out before July 31st).

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I’m still holding onto about 10 of conv deb as I bought them a few years ago as a GIC alternative in my overall balanced portfolio. The energy ones took a huge hit last March but have now pretty much fully recovered. If I was smart I should have double down on them last March and would have made a nice capital gain.