Paul, you probably would not be surprised at the action going on in Level II. LEHM was usually showing size of 1, only just occasionally showing a larger size on retail orders. I saw many trades going off, at LEHM's ask price, of size 1K-5K, so there were a lot more behind that 1 they were showing.
Lehman was spending a few shares to keep the price capped, but they do not have enough ammo to turn this deal into a real "floorless". If the volume had been lower they could have drove it down more, putting lower closing bids on the tape, but due to the buying interest this has not really been possible all month.
The big question in my mind is whether the buying interest has been from longs, or from shorts covering. Judging by the level of spam on the threads, there are still some large shorts out there who still see the need to pay their spammers.
As to the short population, I believe there are a lot of naked shorts who expected Lehman to tank the stock in February (in order to get a juicier conversion price). I believe they miscalculated in this case. Usually what makes a floorless work is other shorts working in sympathy with the holder(s) of the convertibles, but in this case many of the shorts were already "shorted out" and were looking to cover, not to short more.
Even though the number is only good up 'til February 10th, I'm really looking forward to seeing the short interest on Monday. Pretty sure I'm not alone in terms of that anticipation. ;-)
All IMHO...regards,
Gary |
