Nutanix convertibles gain post-earnings; Cloudflare improves; Western Digital active

By Abigail W. Adams

Portland, Me., Sept. 2 – There was an uptick of activity in the convertibles secondary space on Thursday as accounts put money to work heading into the new month.

It was a “lift-a-thon” in the secondary space, which remained better to buy amid a lack of new supply, a source said.

While the S&P 500 index and Nasdaq Composite broached fresh records in intraday activity, they gave back much of those gains heading into the close with the Nasdaq briefly falling into negative territory.

The Dow Jones industrial average closed the day up 131 points, or 0.37%, the S&P 500 index closed the day up 0.28% and the Nasdaq Composite closed the day up 0.14%.

There was $187 million on the tape a little over one hour into Thursday’s session and $662 million in reported volume heading into the market close.

“That’s more than you would expect heading into a holiday weekend,” a source said.

Nutanix Inc.’s 0% convertible notes due 2023 were among the most notable movers in the space with the notes making large gains on an outright and dollar-neutral basis following better-than-expected earnings.

Cloudflare Inc.’s 0% convertible notes due 2026 also saw nominal improvement as stock continued its upward momentum.

While the notes were little changed, Western Digital Corp.’s 1.5% convertible notes due 2024 were active with rumors circulating about a potential merger on the horizon.

Nutanix gains

Nutanix’s 0% convertible notes were the most notable gainers in the secondary space on Thursday with the notes up on an outright and dollar-neutral basis as stock soared.

The 0% convertible notes rose more than 4 points outright with stock up more than 10%.

The notes were changing hands at 109.75 versus a stock price of $41.28 early in the session.

They traded as high as 110 in the late afternoon but stood poised to close the day on a 109-handle.

The notes expanded 1 to 1.5 points dollar-neutral, a source said.

Nutanix’s stock traded to a high of $41.93 and a low of $39.48 before closing the day at $40.40, an increase of 9.34%.

Stock popped after the cloud computing company beat on both the top and bottom lines in its fourth-quarter earnings report.

Nutanix reported a loss per share of 26 cents versus analyst expectations for a loss of 42 cents.

Revenue was $390.7 million versus analyst expectations for revenue of $362.9 million.

Forward guidance also topped expectations.

Cloudflare better

Cloudflare’s 0% convertible notes due 2026 saw nominal improvement on Thursday as stock continued its upward momentum.

The 0% convertible notes were changing hands just north of 101 early in the session.

The notes improved about 0.125 point dollar-neutral, a source said.

The web infrastructure and security company’s stock “saw a good move” the previous session and held onto those gains on Thursday, the source said.

After climbing 5% on Wednesday and setting a new 52-week high of $129.67, Cloudflare’s stock traded to a high of $129.62 and a low of $126.18 before closing the day at $128.61, an increase of 1.39%.

Western Digital eyed

Western Digital’s 1.5% convertible notes due 2024 were active on Thursday although the notes were largely unchanged in the high-volume activity.

The 1.5% convertible notes were changing hands at 101.625 versus a stock price of $60.45 early in the session.

The notes were trading at 101.875 in the late afternoon.

Western Digital’s stock traded to a high of $61.98 and a low of $60.15 before closing the day at $61.64, an increase of 0.98%.

The Wall Street Journal reported earlier in the week that Western Digital and Tokyo-based memory chip maker Kioxia Corp. are in advanced talks to merge in a deal valued at $20 billion.

The deal could be announced in mid-September.

Mentioned in this article:

Cloudflare Inc. NYSE: NET

Nutanix Inc. Nasdaq: NTNX

Western Digital Corp. Nasdaq: WDC

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