Floorless Preferred Stock/Debenture Message Board

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Strategies & Market Trends : Floorless Preferred Stock/Debenture

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To: Puck who wrote (1187)	6/29/2000 2:32:00 PM
From: RockyBalboa	Read Replies (1) of 1438

Looks like Zeev thought about the Goto Zero case. Someone lends a troubled company $1 MM, and gets a convertible which is good for the $1 Million convertible in any amount of shares as defined by 1M / market price with a 33% discount. Shares trade at $1 so, ideally I short shares in such an amount that proceeds from shorting is around $1MM (lets assume 1 Million shares). I could convert at 0.67 so I keep on shorting. Because of the selling the stock trades at 0.5, so I short more shares, 2 Millions, to get $1 Million again.... the first double. Assume I could convert at 0.33 (33% discount) so I could cover all if I wanted to. Short more shares, namely as much as to get again $1 MM in cash, 3 Millions. Stock goes lower and perhaps at conversion price of 0.166 I could cover (there are now 6 Million shares short)... or carry on with shorting even more stock. The money from each share sold goes to the "investor", as he has to pay nothing to cover by conversion. There is a Dead Cat bounce? no problem. With a 20 day lookback period the low conversion price is guaranteed for some time. Ideally, covering and shorting is done repeatedly for maximum turnover. This declares the "pumping" nature in the charts of such failed entities... One non cooperating MM holding up the stocks? No problem, if he doesn't accept your money, then send your con men and they tell the MM to get out of the way on the bid side. Don't forget to tie in the company...directors, Chairmen, other insiders... all need to be paid. Everybody wants his share.

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