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Technology Stocks : VALENCE TECHNOLOGY (VLNC)
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To: golden_tee who wrote (14468)9/10/1999 11:03:00 AM
From: kolo55  Read Replies (2) of 27311
 
It will be interesting to see what CC decides.

We don't know some of the critical info to see how this goes:

We don't know the current status of the negotiations between CC and Valence. Its quite possible this will end with a negotiated agreement.

We also don't know how many shares CC has shorted against the second tranche. If they have shorted most of the 1.3 million they get at the fixed rate, then I suspect they would convert. They almost certainly would convert if the have shorted over 1.3 million; and it is possible they have shorted up to the 1.77 million they get at the current variable conversion price.

Conversely, if they have only shorted around 200-600 thousand, they may try another round to take the price down.

If they don't convert in the next several days, then its likely they haven't shorted anywhere near 1.3 million shares... this in turn means there is a huge naked short position (probably over a million shares) out there that is vulnerable. If CC doesn't convert, and doesn't start the attack again, then these shorts will be out there twisting in the wind, risking a PO announcement.

Since I don't believe CC has shorted a large number of shares against the second tranche, I believe the large number of naked shorts will eventually ignite a rally even stronger than the one we saw earlier this week. This is JMO.

The sellers haven't been present in force since last Wednesday, and right now there is no volume to speak of. The buyers have backed off as well. But the pattern we saw in the prolonged downturn has been broken. Does CC have enough firepower to start an attack again? We will see.

Paul
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