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Technology Stocks : Deswell Industries (DSWL)
DSWL 3.714+0.4%Nov 21 9:30 AM EST
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To: Michael Burry who wrote (571)3/20/1998 9:28:00 AM
From: Ron Bower   of 1418
 
Mike,

See my earlier post on the 144 filing. There were 180K or so outstanding stock options. They are cleaning up the books to get rid of all dilutive stock. Exercising options and selling half to pay for the other half. According to my conversation with Mr. Lau the Insiders don't have the money to pay for the options without selling some of the shares. They must pay the company $10+ for the shares. THey only benefit from new share ownership - not putting cash in their pockets except that they will get more dividend monies.

The timing of the expansion announcement is to let us know we shouldn't panic because of the 144 filing and that they are still moving forward. When they get the Toshiba machines in place - this month, they will be able to expand Kwanasia production. THe new space is for Kwanasia. The earlier space for Jetcrown. Kwanta has been operating under capacity and is still OK.

All of this is presumption on my part, but I think pretty close to what's happening.

I had 4K of DSWLF on margin in addition to my 6K. Sold only the margin shares, still holding the rest. It looked like the price wasn't going to be moving much, locked in some profits, lowered my position, if it fell I would be in a position to buy back in. I just got a little uncomfortable with the margin. Who knows what this market will do concerning any Asian stock. I'm still over 60% Deswell - the 4K was just a market play that gave me a quick $18K.

For what it's worth,
Ron
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