We continue our hedging cycle of articles with a new entry on convertibles. Convertible bonds are essentially bonds with a fixed schedule of payments that can be converted into the shares. While you get a normal safe way to invest money, you also receive possible exposure to the stocks of the companies. Normally, you would prefer investing in convertibles to cover exposure in the short position, but we would like to propose here a more controversial way to deal with it. Essentially, when outweighing some companies, you are going short on their competitors, and if you believe that they will perform well due to some event, you may wish to cover this short position. Although there are quite a lot ways to do that, opening positions in convertibles is a way to get a bond with some coupons checks waiting for you even if the position goes completely wrong, and, thus, need in the constant research on the stock is significantly lower. Although we do not see any strong events in the near future to significantly adverse the odds of our portfolio, one of such companies could be Intel. We would not initiate coverage of the Intel here, but keep in mind that it is a good company, with huge R&D, and it is a direct competitor of two out of our five portfolio companies. Buying Intel would be just a lame way to hedge against a competitor, but by buying bonds, you will just invest more of your money, and if it plays out in the favor of Intel, you get additional bonus. As for the size of the position, as we have already said only two of our investments could go wrong because of Intel, and the exposure in them could not be greater than 100%. Realistically speaking, most of the technologies are under patent protection, different consumers depend on the specific tech Intel is not developing, so the precise estimation is very hard. From the overall structures of business, we think 30% is a max estimate of what you may want to hedge here. As always, it is not a way to earn big money easy, but protect your portfolio against some risk you afraid of while not losing money.