Truthseeker, as I have mentioned on the Floorless thread, this $37.5 MM convert is not floorless, it has a definite floor of about $10.5 (the maximum total number of shares issuable is about 3.5 MM). Furthermore, let me explain why today, I reentered SCON under $15.
First the converts have no interest in hedging their converts (shorting against the block) as long as the stock is under the ceiling of conversion (just under $17).
Second, the converts have a great interest in hedging their position sometime in the next, I would say seven months, at least 20% above said ceiling (they get all their money back and are at no risk if the stock rockets, but could benefit a ,ot if the stock is near $10.5 nine months hence).
My strategy is thus to expect an engineered price rise to above $20 a share (possibly around the natural overhead resistance of $23) with very large volume, so the hedging can take place (about, I would say 2 MM shares) We should see an increase in the monthly short position as we go above $20 and then an exit would, IMTO, be warranted. Right now, I am shooting for a 50% gain in the next three months.
Zeev |
