Whiting Petroleum, energy sector better on swap; tech in line; Heartware convertibles drop

By Rebecca Melvin

New York, Oct. 13 – U.S. convertibles trading activity picked up as many bond market players returned to work from a three-day weekend in observance of Columbus Day.

Convertibles energy names were generally better.

Whiting Petroleum Corp.’s convertibles were better on swap by a point or more as shares of the Denver-based oil and gas company extended losses, slipping another 89 cents, or 4.4%, to $19.27 on top of a 10% drop on Monday.

Chesapeake Energy Corp., was also better on the day, a New York-based trader said. Although the only Chesapeake convertible issue that was trading actively was the 2.25% bonds, which changed hands at 73, traders said.

Also of note, Secor Holdings Inc. was said to be moving to the upside.

Technology was also a focus ahead of Intel Corp.’s quarterly results, which revealed after the market close earnings that were better than estimated, but still slightly lower year over year amid ongoing weakness in its PC business.

The salesforce.com Inc. convertibles traded mostly in step with shares of the San Francisco-based cloud computing company. The company announced a $100 million investment commitment in European startups from Salesforce Venues, the intention of which is to fuel cloud innovation and customer success.

Twitter Inc.’s convertibles were higher on an outright basis as shares of the social media site gained following the announcement that the company plans to lay off about 8% of its workforce, or up to 336 positions.

Twitter also said that it expects revenue and adjusted earnings to come in above the high end of its previously forecast range when it reports third-quarter results at the end of this month.

The Twitter restructuring plan comes about a week after co-founder Jack Dorsey returned as Twitter’s chief executive.

Health care was doing OK on Tuesday, a New York-based trader said. But HeartWare International Inc.’s convertibles took a leg lower as shares plunged 20% after the medical-device maker disclosed that it may not reinitiate enrollment in MVAD ventricular assist heart pump clinical trials in November as previously expected.

Heartware said it has begun investigating causes of adverse events in certain trial patients and is implementing manufacturing improvements as well as software updates. But it remains confident in the system and its design to improve outcomes for ventricular assist patients in a meaningful way.

In September, Heartware said that it paused its MVAD clinical trial to address a manufacturing process issue.

Heartware’s 1.75% convertibles due 2021 were indicated down at 76.75 from 84.07, according to a pricing source. And Heartware’s 3.5% convertibles due 2017 were seen down to 81 from 86.46.

Shares of the Framingham, Mass., and Sydney, Australia-based company fell $8.82, or 20%, to $35.21 in heavy volume.

Host Hotels & Resorts Inc.’s 2.5% convertibles due 2029 were trading actively in the early going and were at 138.5 with shares off about 12 cents at $17.55 at late morning.

Last week, Host Hotels priced $400 million of 4.5% straight notes due 2026, and on Friday, shares breached its 50-day moving average to the upside.

The Host Hotels’ bond was “Tracing in size,” a trader said.

Whiting Petroleum better

Whiting’s 1.75% convertibles due 2019 were quoted at 90.375 versus an underlying share price of $20.16.

The bonds were called up another point on the day, on top of at least another point of expansion in the last several days.

Whiting shares fell 89 cents, or 4.4%, at $19.27. Most of the downturn came at the end of the session. Early on, the bonds were on the rise and spent a good portion of the morning in positive territory.

Shares moved in tandem with oil prices, and for a second straight day, prices turned decidedly lower toward the end of the session after spending a portion of early trading in positive territory.

West Texas Intermediate crude oil for November delivery closed down 53 cents, or 1.1%, on Tuesday to $46.57. That was on top of a $2.20, or 4.4%, decline on Monday.

“The energy sector is doing better, and recovering from their lows, but there was not a lot of activity,” a trader said.

“Whiting was a point better today,” the trader said.

Tech in focus

Intel was trading a bit but not moving notably on Tuesday ahead of its earnings report.

Shares of the Santa Clara, Calif.-based chipmaker slipped on the report, which showed earnings that were better than expected, but still lower on flat revenue.

Intel reported earnings of $3.1 billion, or 64 cents per share, for its third quarter, compared to $3.3 billion, or 66 cents per share, in the year-earlier period. Analysts had expected earnings of 59 cents per share.

Revenue slipped to $14.5 billion from $14.6 billion in the year-ago period. Analysts had estimated only $14.22 billion in revenue.

Elsewhere in the tech sector, the salesforce.com 0.25% convertibles due 2018 traded as high as 131.25, which was up from about 128.5 previously. But the convertibles also traded lower at about 130 and back in the 128 range. Salesforce shares were up 2% at $77.50.

The shares of the San Francisco-based cloud computing company gained 75 cents, or 1%, to $76.63.

Twitter was another name in focus, and the Twitter 0.25% convertibles due 2019 changed hands at 88.5, according to Trace data, while the Twitter 1% convertibles due 2021 were at 86.3.

Twitter’s stock was up about 5.4% to $30.30 in the early going, but it pared gains – as did the broader market – to end up only 31 cents, or 1%, to $29.06.

A New York-based trader said it looked like the bonds were moving up in line.

Twitter said that it will lay off about 8% of its workforce, or up to 336 jobs. The restructuring plan comes about a week after co-founder Jack Dorsey returned as Twitter’s chief executive. The company also said that it expects revenue and adjusted earnings to come in above the high end of its previously forecast range for the third quarter.

Mentioned in this article:

Chesapeake Energy Corp. NYSE: CHK

Heartware International Inc. Nasdaq: HTWR

Host Hotels & Resorts Inc. NYSE: HST

Twitter Inc. Nasdaq: TWTR

salesforce.com Inc. NYSE: CRM

Secor Holdings Ltd. NYSE: CKH

Twitter Inc. Nasdaq: TWTR

Whiting Petroleum Corp. NYSE: WLL

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