Booking eyed ahead of maturity; Dick’s Sporting Goods active; Dynavax, Pure Storage gain

By Abigail W. Adams

Portland, Me., Aug. 26 – Despite a lack of primary market activity, the convertibles secondary space continued to see decent trading volume on Thursday on a choppy day for equities.

Following a three-day rally that saw the S&P 500 index and Nasdaq Composite broach fresh heights, equity benchmarks were firmly in the red on Thursday as the market braces itself for the Federal Reserve to make an announcement regarding bond tapering on Friday.

The Dow Jones industrial average closed the day down 192 points, or 0.54%, the S&P 500 closed down 0.58%, the Nasdaq Composite closed down 0.64% and the Russell 2000 closed down 1.05%.

The convertibles secondary space saw $125 million in reported volume about one hour into the session and $513 million in reported volume heading into the market close.

However, there continued to be a wide range to the names that were active in the space.

Booking Holdings Inc.’s 0.9% convertible notes due Sept. 15, 2021 once again dominated the tape as the notes continued to switch hands heading into their maturity.

While the deep-in-the-money convertible notes were little changed dollar-neutral, Dick’s Sporting Goods Inc.’s 3.25% convertible notes due 2025 remained active as stock continued to climb following earnings.

Dynavax Technologies Corp.’s 2.5% convertible notes due 2026 and Pure Storage Inc.’s 0.125% convertible notes due 2023 also gained on an outright basis in active trading with stock on the rise despite a down day for the market.

Booking in focus

Booking Holdings’ 0.9% convertible notes due Sept. 15, 2021 continued to dominate the tape as the notes’ maturity looms.

The 0.9% convertible notes were changing hands a few points below parity with the notes in their averaging period.

The 0.9% convertible notes were changing hands just north of 107 versus an equity price of $2,275.94 in the late afternoon, according to a market source.

There was more than $33 million in reported volume.

Booking’s stock traded to a high of $2,292.39 and a low of $2,250 before closing the day at $2,276.80, an increase of 0.57%.

The 0.9% notes have been active throughout the past two weeks with the notes switching hands as they prepare to be retired.

Dick’s Sporting Goods active

Dick’s Sporting Goods’ 3.25% convertible notes due 2025 remained active as stock continued its upward momentum following a positive earnings report.

The deep-in-the-money convertible notes broached quadruple par on Thursday.

They were changing hands at 395.5 versus an equity price of $136.15 in the late afternoon.

There was more than $22 million in reported volume.

Dick’s Sporting Goods’ stock traded to a high of 136.55 and a low of 128.32 before closing the day at $134.98, an increase of 4.18%.

Stock continued its upward momentum after surging 13% the previous session.

Stock was on the rise following blow-out earnings and strong guidance.

The 3.25% convertible notes are essentially an equity surrogate, a source said.

Dick’s priced a $575 million issue of the 3.25% notes in April 2020 as part of a wave of rescue financing in the heart of the pandemic.

Stock was $26.21 when the convertible notes priced.

Dynavax gains outright

Dynavax’s 2.5% convertible notes due 2026 were on the rise in active trading on another strong day for the vaccine maker’s stock.

The 2.5% convertible notes were up more than 8 points outright.

They were changing hands at 184.5 versus a stock price of $17.74 in the late afternoon.

There was more than $20 million of the bonds on the tape.

Dynavax’s stock traded to a low of $16.34 and a high of $18.13 before closing the day at $17.55, an increase of 8.07%.

Stock has been on a tear over the past week following news that a Covid-19 vaccine the company developed in partnership with Taiwan’s Medigen is in use in Taiwan.

Stock has climbed more than 27% over the past week.

Pure Storage

Pure Storage’s 0.125% convertible notes due 2023 were on the rise alongside stock following better-than-expected earnings.

The software company’s 0.125% convertible notes due 2023 gained more than 7 points outright with stock up more than 10%.

The notes were changing hands at 114 versus a stock price of $24.42 early in the session.

They came in slightly as stock gave back some gains as the session progressed.

The notes were changing hands at 112.75 versus a stock price of $23.96 in the late afternoon.

There was more than $13 million in reported volume.

Pure Storage’s stock traded to a high of $24.99 and a low of $23.29 before closing the day at $23.84, an increase of 13.79%.

Stock surged after the company reported earnings per share of 14 cents versus analyst expectations of earnings of 5 cents.

Revenue was $496.8 million versus analyst expectations for revenue of $471.6 million.

In addition to a large earnings beat, the company reported upbeat guidance which exceeded expectations.

Mentioned this article:

Booking Holdings Inc. Nasdaq: BKNG

Dick’s Sporting Goods Inc. NYSE: DKS

Dynavax Technologies Corp. Nasdaq: DVAX

Pure Storage Inc. NYSE: PSTG

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