was opening an office in London and obtaining a registration and license with the British Financial Services Authority. This is significant because the FSA license allows Advent Capital to trade on the London exchange, making the office more than just a European marketing presence.
The firm also entered into a $100 million joint venture with Insinger de Beufort, a private bank in the Netherlands, whereby Advent Capital took over the management of a private fund that had been previously established by the bank. The companies jointly market the fund throughout Europe and South Africa.
Having the vision to develop a business that, like a well-balanced portfolio, is itself diversified, and taking the steps to compete more effectively on a global basis were the key
What’s a Convertible?
To understand Advent Capital, it’s important to know at least a little bit about convertibles. If you’re not familiar, take comfort. “Ninety-nine percent of investors don’t know anything about convertibles,” says Maitland. “That’s our challenge, to educate them.”
So how do convertibles work? To set the stage, know that convertibles are conservative investments that offer some protection from losses. Because the bonds can be converted into stock, they benefit if the stock price rises. Investors in convertibles won’t benefit as fully as the stockholders, but they will capture most of those gains. If the stock goes down, investors in convertibles will still be able to cash in the bond at maturity, and will have collected interest payments along the way.
Convertibles are often overlooked, Maitland says, because they have an element of stocks as well as an element of bonds. Because investors can’t easily categorize convertibles as an investment type that they are familiar with, they don’t get a lot of attention. “Even at Merrill Lynch, though [the convertibles] unit was the most profitable unit on the floor, we were always ‘those guys over in the corner’ because it wasn’t a mainstream business.”
It was at Merrill Lynch that Maitland made his name in the convertibles market. And, at least in part, it was this general lack of familiarity with convertibles in the marketplace that helped position Maitland to become an effective salesman and build his national reputation. Early in his career, in the mid-1980s, Maitland had the opportunity to work out of the firm’s institutional office in Detroit. The native New Yorker initially passed on the Midwest offer, but after a return visit fully recognized the potential of the position.
Within two years, Maitland had established the convertibles business in Detroit and helped grow the office to the second- largest satellite office for convertible sales and trading in the Merrill Lynch system. He says playing the role of an educator was instrumental. By visiting the officers of Midwestern banks who hadn’t used convertibles, he was able to show them how convertibles offered a mix of capital preservation with some upside potential, which was a balance of risk and reward that fit the investment goals of their clients. “It’s the ideal security for trust banks and insurance companies, which tend