Morning Commentary: New paper from Patrick, Nutanix strong; Acorda active on buy-out speculation

By Abigail W. Adams

Portland, Me., Jan. 19 – New paper from Nutanix Inc. and Patrick Industries Inc. continued to perform well early in Friday’s session. The deals, totaling $650 million, were welcome in a contracted convertible space.

“It’s been a good start to the year,” a market source said.

Nutanix’s 0% convertible notes due 2023 were up a point on a dollar-neutral basis early in Friday’s session, although trading of the notes slowed, a market source said. The notes firmed around 102 on an outright basis.

Patrick Industries’ 1% convertible notes due 2023 maintained a 0.5 point expansion on a dollar-neutral basis in early trading Friday.

The deal, which priced within talk after the market close on Wednesday, was marketed to outright buyers, a market source said.

When the stock moved up Thursday, “some guys were flipping” the notes, a market source said. The rise in Patrick Industries’ stock was attributed to stock buying from the call spread.

The 1% notes ended Thursday weaker, but were up again on Friday. The notes were trading at 103.5 versus an equity price of $68.00.

Acorda Therapeutics Inc.’s 1.75% convertible notes due 2021 were active and making gains on an outright basis amid rumors of a potential buy-out from Biogen Inc.

The notes gained about 2 points to trade around 96 early Friday after solidifying around 94 in active trading Thursday. Acorda stock was up 10% to $27.50 in early trading.

The Ardsley, NY-based biotechnology company has long been the subject of potential take-over rumors but “the speculation is heating up,” a market source said.

While the company’s 1.75% notes and stock have been active amidst various media reports that have surfaced recently, there is nothing definitive yet.

“It’s all just speculation at this point,” the source said.

The fate of the convertible note will largely depend on the takeout price when and if the acquisition out occurs.

“If you’re a hedge you have to watch your delta,” the source said.

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