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Technology Stocks : CDRD (CD Radio)
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To: Chang-Shing Perng who wrote (149)6/21/1997 1:18:00 AM
From: Candle stick   of 904
 
Here are my thoughts on the possibility of a short squeeze of any substantial nature:

Well , I think that most of the short position that exists is initiated by the convertable preferred stock holders. Follow me on this: They will try to convert into 9+ million shares of common and then sell the common on the open market to recoup thier money plus the guaranteed return( a factor of the selling price). So they know that there will be massive selling in the stock because they will be the sellers. So, why be content with just the guaranteed return?
Since they know when they will convert and sell, they also short the stock ahead of time, since they know that the selling by themselves will drive the price lower. They will then reap even bigger rewards by covering thier shorts once the price has been lowered by the converted common being sold!! I mean this is a rare opportunity since the amount of stock to be converted and sold is so great! Close to 10 million shares with the actual float being
probably less than 6 million out there, there is almost no chance that the stock can go up. They can also fill in thier shorts at the very end with thier last shares to convert once the price has been driven down. I mean that only 900,000 shares are short and almost 10 million are registered to be sold. So they keep 10% of thier convertibles handy to take in to cover the shorts(assumming they are the entire short position). If you assume that the
convertable preferred holders are the majority short position, then I believe that the chance of a short squeeze is slim to none, since they control the supply of stock and dont have to worry about where to cover............;^)
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