New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1921-08-07
Some Convertible Bonds

Question--Will you please explain to me
the convertible feature of Cerro de Pasco
per cent bonds convertible into common
$500 bond or five 500 bonds, or arc they
issued only In $1,000 denominations? Can
his issue of bonds act as a deterrent to
above SS Ia per share? Assume that I
bought $500 bond and tho common stock
advanced to $50 per share: Could ! turn
in nv bond and ask for fifteen shares of
common stock? Or do have to wait
until my bond reaches a market value Of
$3.50? l will appreciate your naming two
nominations which have profitable CONVEX
sion privileges. I prefer domestic indus
trials. Also. remember reading in your
column some time ago that Cerro de Pasco
common stock was tho best OF all the
coppers. I see in that case ] might do
better to purchase the common stock at
advise on speculation, but inasmuch az 1
am willing to assume q fair risk will APP
as compared with Anaconda.--A. T. NJ.
1881, come only in $1,000 denomina-
tons, and up to and including Jan
uary l, 1881, you could convert your
$1,000 bond into thirty shares of stock.
II, therefore, the market price Of the
stock goes. above SO 1-3 q share, you
could make profit, if you had paid
par for the bond, by converting your
bond and selling the stock for cash
AS matter of fact, if the stock should
go above 33 1-3 your bonds would fol-
low up in price the market price of
the stock. But this is mere matter
of open market conditions, and regard.
market, if the stock sold at so you
could demand and obtain from the
company thirty shares Of stock in ex-
change for your $1,000 bond. Much the
safest way to speculate in Cerro de
Pasco stock would be to buy the con-
vertible bonds, but of course you do
| not have as wide a margin for profit
as you would have in the stock. The
stock has recently sold in the neigh
borhood Of 81 and Anaconda at 38. The
present depression in the copper in
dustry has had similar effect on the
earning power of both companies. Both
began to show increased production in
March. The fact Cerro de Pasco has
new $4,000, 900 smelter in Peru COM
ing into service in the summer Of
1922 gives this company's stock a
speculative possibility. American Su-
matra 73ss, due 1925, come in 500
denominations and are convertible in
.95 share Of stock per 500 bond up
to December 81, 1921, and into g
share thereafter to maturity. Chile
Copper Z, due 1928, come in $500 de-
| nominations and are convertible par
for par into stock. American Tele-
phone and Telegraph Is. 1925, are
| convertible at any time into stock at
| 106-that is, you can get one share
of stock for a $500 bond, plus Sc.
Holds Good List of Bonds
Question: read your investment sug
gestons with much interest. Would YOU
advise mo to change any of the follow
Ing bonds. which hold? They all in
81 900 denominations: Liberty ANS 1928;
r.. r. refundng S. 2o47; Northern Pa
| cific Great Northern 6hs 1895; Pehnsyl-
vania Railroad eias, 1895; Northwestern
Boil Telephone 7s ls4l Wabash Railroad
nrst 70. 1899: Grand Trunk 7a 1888; Gulf
TVS 1881; Bell Telephone OF Pennsylvania
| rs. 1876: Southern Pacific first rcfunding
Is. 1855; Union Pacific first 4a 1e47; Chi
csgo. Milwaukee & st. Paul Railway gem
eral ~ per cent. 1899; Missouri Pacific
Is. 1858: government of Denmark ss. 1896;
United Kingdom 5hs 1887; French gov
ernment Ths 1915; Kingdom of Norway
J. 1910; Brooklyn Edison Is, $780, Kansas
| city Power and Light IS. ls%o?-M. B.
Answer-you have strong list, well
diversified and nearly all of your
bonds could be classcd as high grade.
The Chicago, Milwaukee 4 ST. Paul
general AVS are dependent to some
extent upon the outcome of the gem
crai railroad situation, and the ST. Paul
has been a weak road in the last few
years. The same may be said of the
Wabash Is.