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Technology Stocks : C-Cube
CUBE 36.29+1.8%Nov 21 3:59 PM EST
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To: stockbug who wrote (14614)4/26/1997 4:12:00 PM
From: Robert Gintel   of 50808
 
Let me try some further explanation. Our mutual fund purchased the shares (some at $37) and it is our mutual fund that has loaned the shares out. It is the mutual fund that is receiving the interest on the stock loan. The interest ranges from 5 1/4% - 5 1/2%, and because the stock is so tight, we are keeping the entire amount without a haircut. When the stock ran up to $50, our effective rate of interest was around 9% for a while. The shares were loaned to a major Stock Exchange clearing firm (not ours). The interest on the stock loan has been earned by the shareholders of our mutual fund. But that is not why we bought Cube stock to begin with. We bought it for appreciation, and the opportunity to loan or not loan out the stock is purely coincidental. You are quite right. What happens to the price of the stock, is far more important to us than the interest our shareholders earn on its stock loan. But why not get it, as though it was a dividend paid by the company?

I repeat. I do not believe this group can artificially run in the shorts by a grass roots movement to remove Cube stock from margin accounts. Most of the stock is probably loaned out by institutions anyway. And as I have said, and as others here I think also believe, I would rather have Cube appreciate in a normal legitimate manner and not in a short term artificial spike that would cause us to consider selling out shares. We have stocks in our portfolio that go back five and 10 years. Ours is a different and more traditional investment mentality from many others here and I thought it would help some to understand it, as it relates to our being willing to lend out our Cube shares.

I have been lurking here for quite a while, and I want to say that some of the best and most timely research on Wall Street is right here.

P.S. Our brokerage firm has smaller accounts that hold Cube stock too. They are held at a major clearing firm. They are not loaned out.
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