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Strategies & Market Trends : Floorless Preferred Stock/Debenture
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To: Zeev Hed who wrote (473)6/16/1999 1:18:00 AM
From: F. Lynn  Read Replies (2) of 1438
 
Well, that assumes the broker lending you the shares understands the nature of the instrument AND IS WILLING TO LEND YOU SECURITIES BASED UPON THE FUTURE REDEMPTION VALUE OF THE CONV DEBENTURE, NOT ITS CURRENT MARKET OR PRESENT VALUE.
Are you sure brokers will do this?
as i mentioned in my earlier post about scattered, i know of at least one example when the convertible nature of the instruemnt did not prevent margin calls. In that case, the firm had an arb position of short stock/long warrants and still got hit with massive margin calls when the stock rallied.
So I don't think all brokers can or will do this kind of lending.
If you have first hand knowledge that would be most interesting.
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