Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: mishedlo who wrote (71505)	11/21/2007 7:54:38 PM
From: Incitatus	Read Replies (2) of 116555

Countrywide shares traded for about three hours below $9 on Tuesday, half the $18 conversion price for the $2 billion of preferred stock Bank of America Corp (BAC.N: Quote, Profile, Research), the second- largest U.S. bank, bought in August. Given the convertible stock, wouldn't it be smart for BoA to short Countrywide just under $18 per share? If Countrywide goes bankrupt, they make out huge on the short. If Countrywide succeeds and the stock rises, they can convert the preferred stock to cover the shorts. It prevents the "unlimited upside risk" of shorting and prevents any need to cover on a rally. I think it's called shorting against the box?

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