Using options instead of shorting might work. But have had no trouble getting shares to short on ETrade. All three market shorts in the past week or three have been executed in seconds.
A potential acquirer of McData, be it Sun, IBM, EMC again (because it's cheaper now) or some other company, would only be interested in MCDTA and not MCDT, because MCDTA constitutes about 97% of the voting shares in about 74% of the shares, while MCDT with its 26% only has 3% of the votes.
This will mean MCDTA would command a "control premium" price compared to MCDT, eliminating the current spread and making a short MCDT, buy MCDTA trade profitable.
Original message:
buy MCDTA, short MCDT good arb play, I agree. MCDT and MCDTA (recent spinoff from hugely successful EMC) are identical in all respects except MCDTA (class A stock) has one vote per share while MCDT (class B stock) only has a tenth of a vote per share. But MCDT sells for about 10% more than MCDTA (2-24-01 close: MCDT 23 5/8; MCDTA 20 3/4). So short MCDT while buying MCDTA and then close out the position when MCDTA is more than MCDT. [Herbalife A and Advanta A sell for more than their comparable B shares.] If not interested in shorting but instead want stock in MCDT or MCDTA (profit 4th quarter up over 500% from year ago quarter on revenue increase of over 100%) be sure to buy the cheaper but inherently more valuable MCDTA and avoid the relatively overpriced MCDT, as long as the current price relationship between the two stock classes holds.
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