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Technology Stocks : NEXTEL
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To: David Kuspa who wrote (2455)10/9/1997 9:37:00 PM
From: Bubba   of 10227
 
David - short interest can be deceiving. Below I repeat a prior post of mine.

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Short interest deceiving.

One-NXTL has converts via the DECS issue of this past Spring. Convert
desks short the stock vs the converts for "convertible arbitrage".

Two-Pittencrieff merger might cause merger arbs to short NXTL vs PITC to
play the spread.

Three-Issuance of straight debt can even cause the bond & preferred arb
guys to short the stock as part of their hedge of their long bond or
preferred position. NXTL has had a passel (local vernacular for hundreds
of millions) of debt & pref issued this last several months.

Four-Consent solicitation in early Sept on the 9 3/4 split coupons gave
bond holders ability to buy stock worth 2.5% of face amount of bonds at
appx $16. Stock is not tradable until January I think. Thus you short
today and cover in Jan. There are over $1bil of these bonds out plus
another issue that I think was also in the Consent Solicitation.
Multiply 2.5% x the face amount and you can get a decent size short
position. I think the amount of shares issued was actually about 4mm but
I'm not sure. Not all of these 4mm would be short but a lot would be as
these bonds are very popular for junk funds.

Five-There are regular, traditional shorts in this stock. My guess is
that a small percentage of the shorts are in this group.

WHEW!

Hope this helps explain the short position.

Bubba, Bh.D.
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