I still believe that CC has to convert...
... at least some of their shares. They must have shorted a significant number of shares below the current conversion price, and probably don't want to let the conversion price climb too high above their shorting price, before they convert. If we get a close of 5.00 tomorrow and Thursday, the conversion price will rise to at least 5.10 a share. A higher close than 5 each day pushes the conversion price even higher.
The recent selling binge just seems to confirm that there is a big short position out there. The longs have withstood these kinds of concentrated selling attacks quite well, and I don't think the current one will be successful. I don't think they can hold the price below 5 for long, and so buying at 5.00 seems a reasonable strategy for longs.
We noticed that HRZG (who has been a big buyer, probably close to 500k shares or more, and then who sold around 100k in the high 5s) was buying today near the close. This is good news in that they are likely replacing their shares, and will put a floor under the stock.
In any case, I see the worst case downside as 4.50, since we have bounced off that level five times. A better estimate of the downside is 4.95, the current conversion price... I don't think the shorts will want to sell under CC's conversion price, and will likely cover under that price. We are getting closer to the end game.
I look forward to reading the 10Q.
Paul |
