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Biotech / Medical : Ligand (LGND) Breakout!
LGND 190.25-2.7%Jan 28 3:59 PM EST
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To: CYBERKEN who wrote (8058)9/30/1997 4:18:00 AM
From: Henry Niman   of 32384
 
The arbitarge position does NOT require purchase of LGND shares. Before June 3, 1997 ALRI and LGNDW were contained in ALRIZ (1 share of ALRI and 2 shares of LGNDW). Thus the arbitrage play would short a given number of LGND and buy half as many ALRIZ. Thus if 1 million shares of LGND were shorted, then 1/2 million shares of ALRIZ would have been bought so the postion would own 1 million LGNDW which would be used to cover the 1 million short shares of LGND. This was employed by Farallon (and is documented in 13D filings and may represent as much as 2 million short shares of LGND). Thus, most of the short position on LGND will NOT be impacted by a short squeeze precipitated by a price increase in LGND. The artbitage postion could be held until June 3, 2000 (last exercise date for LGNDW).
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