RE:TWM.DBI'm putting on my hedge fund guy hat for a possible explanation for you. Think of the debs as three separate securities. First the 5.5% bond. Shouldn't trade over par, but not too far below. 90-95 depending on maturity date? Ish? The straight up equity value. X shares times x price per share, also clearly not worth par. Third is the option value for the equity. I don't have all the data to calculate the black scholes value for the option value but that's what hedgies do. So as just an example. If stock is 1.50, strike/exercise is 1.86, time to maturity is 3 years, annualized volatility is 50% and the risk free rate is 2%, then the option value is 31 cents per share. So if you add the option value to the bond value it's completely plausible to get to 106. I get 100/1.86 = 53.76 shares times .31 = 16.7 per 100. Plus bond value of say 90, you get to, magically, not so insanely, 106.70.
I prefer the stock straight up.
fauxtomato wrote: Seems insane to me, but the convertibles are trading above par at 106. They convert at 1.86 and pay 5.5%. Why would they be bid up? I can understand looking for yield and obviously understand the case for owning TWM, but the convertibles seem like the worst combination of both of those things?