LifeOne, Inc. (LONE) Message Board

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Microcap & Penny Stocks : LifeOne, Inc. (LONE)

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To: GlenRP who wrote (1399)	7/19/1999 2:42:00 AM
From: Puck	Read Replies (1) of 1834

I have reached that stage in my investing career when I feel that I should expand my investing activities to include transactions on margin and options strategies. In reviewing the risks involved with short selling recently, I was reminded that short sellers are responsible for paying dividends on stock sold short through their accounts. Since LONE's acquisition spin-out strategy involves making a stock dividend of the spin-out co. to shareholders for each such spin-out, I realize that these dividends would cause some real pain to LONE short sellers. They would have to come up with shares of the spin-out to make the payment to purchasers of their shorted shares. I imagine that could be challenging to do. As far as I can figure, the only way they could come up with shares of the spin-out companies would be by purchasing them on the open market (which would probably distort the market for these co's as I guess the floats will be quite small in keeping with what I presume will be their tiny size), unless they could somehow engage in shorting the spin-out co's stocks by somehow delivering dividend shares of the spin-out co's involved without actually having acquired them, which, judging by their past actions, they appear quite capable of doing if possible. I wonder if LONE management is thinking about this issue as they go forward with their plans. If I were LONE, I would delay announcing the record date for the distribution to LONE shareholders until the day of distribution to give the short sellers as little advance notice as possible about what will become a potential liability for them so that they couldn't attempt to deal with the situation by covering their short positions in advance of the distribution and then re-building them immediately afterwards. The element of surprise has long been recognized as a fundamental advantage in warfare. Do you or anyone else have an opinion about my speculations? I'm debating whether or not to send a message to the co. to remind them of this issue just in case they weren't focusing on it.

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