Lucent Technologies (LU) Message Board

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Technology Stocks : Lucent Technologies (LU)

LU 2.650

+0.4%

Dec 26 9:30 AM EST

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To: Gary105 who wrote (18541)	8/2/2001 8:07:42 AM
From: GVTucker	Read Replies (1) of 21876

This deal is a pretty good situation for the convertible arb hedge funds. Buy the 8% LU converts, short the common stock. Your total yield is about 12% (8% on the convert, 4% on the short sale proceeds) and you manage the short common/long convert in an attempt to zero the exposure to LU (it can't be done completely, but a lot of convert arb guys think it can be.) Then they all lever the beejeebers out of it to juice up the return. They're all just playing a game to make money. The company, LU, is irrelevant. Stockholders lose. Don't necessarily blame current management, though. They're just trying to stay in business.

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