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Gold/Mining/Energy : Harken Energy Corporation (HEC)
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To: Rod Copeland who wrote (3288)7/25/1998 8:30:00 PM
From: Zeev Hed   of 5504
 
Rod, I am surprised no one mentioned the 5 MM shares decline in short interest in HEC during the period Jun 15 to July 15. That would generally be quite bullish (indicating that some major players think that this stock may not go much lower). However, another possible explanation would be the wind down of an arbitrage position set up by the debentures holders that was called late in June. If memory serves this debenture was a fixed conversion rate debenture and the price of HEC did go above the conversion price in the last six month, providing an incentive to the holders to short against the block (cash in some profits and all their money back) and continue getting interest, nothing nefarious about that.

My worry, however, is that with the three instruments outstanding (and particularly the floorless ones), the short position may increase again in the months to come. It will interesting to follow the short position and see if it is building up at all.

Zeev
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