Harold,
I would defer to a tax attorney regarding the long term holding period for the Preferred A shares, but I suspect that since they hedged most of the position prior to long term, they would have a short term gain on the hedged short shares.
Also I don't know about the remainder of the B shares, but I suspect they have hedged most of the remaining unhedged B shares as well as sold their portion of B shares converted and not previously hedged.
If they have not hedged their remaining shares, then someone out there is a "whole lot naked short". I suspect a bit of both, ie, that CC has hedged their remaining B shares and there is a reasonably large (300,000 - 500,000) naked short position out there. This should be clarified a bit when this month's short position becomes available later next week.
On another topic, a company spokesman indicated sometime last week to a professional investor/contact of mine that he had been told by the institutional investor who had purchased the shares privately that they had not sold any shares whatsoever.
So either an earlier institutional investor (ie, Dimensional Fund or even Bellcore???) may have been selling long shares - or Castle Creek selling the remaining 400,000 converted B shares. Your guess is as good as mine.
I do agree with MGV that the CC conversion is bullish - but that we do not know what becomes/became of the remaining B shares, ie, the 400,000 that they took delivery of or the remaining 1.0 mm or so which were not converted yet.
Still long and comfortable. |
