Macro: Convertibles

First Team

Venu Krishna & team

Lehman

Second Team

Tatyana Hube & team,Merrill Lynch

Third Team

Lynn Hambright, Adrian Miller, Stuart Novick,Citi

The three-member Lehman Brothers team, led by Venu Krishna, 41, lands on top for a fourth consecutive year. “They are quick to focus on timely issues,” says one money manager, citing a May recommendation to buy the convertible notes, not the common shares, of Armor Holdings, after the Jacksonville, Florida–based tank builder agreed to be acquired by BAE Systems, a U.K.-based maker of military transport. When the takeover closed three months later, the notes were up 12.6 percent, while the common shares had appreciated just 2.5 percent. Other clients prize a series of reports about the regulatory complexities of convertibles accounting, especially June’s “Bracing for Accounting Distortions.” As one admirer says, “No one else gives us such thorough analysis.” In February, Tatyana Hube replaced Yaw Debrah as head of Merrill Lynch’s two-member convertibles squad, which takes second for a third year running. (Debrah was promoted to co-head of global equity-linked research.) In May the team added BioMarin Pharmaceutical’s 1.875 percent 2017 notes to its model portfolio, based largely on the Novato, California–based biotechnology developer’s drug pipeline. Through mid-September the securities appreciated 23.6 percent. “They have the knowledge and experience we need,” attests one investor. Citi’s three-member squad of Lynn Hambright, Adrian Miller and Stuart Novick repeats in third. “They facilitate company visits and access to managements in a more collegial way than anyone else,” contends one supporter. The Citi team’s monthly newsletters are valued too, for what one money manager calls “newsy updates on the latest convert issues.”