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Strategies & Market Trends : Thai Funds

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To: Polartee who wrote ()	9/15/1997 6:54:00 PM
From: J. Lobo	of 107

John, When you say you are short both TC and TTF do you mean to say you are actually short the stocks or that you believe they are good shorting candidates? The difference is much more than academic. As you've pointed out, it is obvious that TC and TTF are way overvalued, but how you can actually profit from this is not so clear. From what I've heard it is virtually impossible to short these as there is no stock to borrow. If you are lucky enough to be able to short them, you face the ugly reality of the stock being called at any point. Even if it's not called away from you, are you prepared for the possibility they may go to a 75% premium to NAV. You may feel this is ridiculous, but if you had shorted them when they were at a 40% premium you could have easily argued that there was no way they would ever rise to a 60% premium. Without a way to hedge the short (e.g. with a Thai open end fund which doesn't exist), it is quite a gamble. As was pointed out in an earlier post, it's the inability of being able to hedge this bet that keeps the premium so high. A short squeeze could also drive these premiums even higher. Let us know if you've actually executed these shorts, or if this is still in the theoretical stage.

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