Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Cobalt International Energy (NYSE:CIE) fell as much as 11% today after the company announced a debt sale.

So what: The company announced after the market closed last night that it will sell $1.2 billion of convertible senior notes due 2019. Today it priced those bonds with a 2.625% interest rate and gives the holder an option to convert a $1,000 bond into cash, 28.023 shares of stock, or a combination of the two.  

Now what: The conversion price is $35.68 per share, which is much higher than the price today, but it essentially dilutes upside for investors. The market is simply responding to this dilution since the stock is still a speculative play and bullish investors are looking for the upside anyway. This takes some of the air out of Cobalt for equity investors, and while the move doesn't change the overall investment thesis, it limits the upside somewhat.

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