Shane,
My logic at the end of the day was that as Bear, Stearns and Co.(BSC) has heavily invested in CTYS (via debt and equity), they would have demanded CTYS to give them all the information to support the stock. Forget about the legality for insider information. Suppose (again I may be wrong) that BSC asked the MM's to buy all shares at whatever the offer less 1/16. MMs kept revising the bids till it hit 5 11/16 when sellers stopped selling. At this stage, sellers wondered what could be happening and then decided to not sell at any lower price than 5 11/16. This was a pure supply and demand situation. If the big buyer (assuming that there was one) did a complete evaluation and chose to support, then the price is unlikely to go down further because they will buy all offers less 1/16 and no sellers wanted to sell at prices less than 5 11/16. At this stage, sellers may feel the heat of selling (or short-selling) more.
It is not a bad idea at all to own 96% of CTYS. If I were at BSC, I would advise them to do so because (even if there are some temporary problems), all that could be resolved as this sector is basically sound. The other day, Fleet Financial (credit card co.) with far more severe delinquency problems was offered a huge price in a buyout. The home-equity lending (even at CTYS) is much less risky than credit card loans. True, Moody's rating is squeezing the price, but at the end if the business can be proven to be great at CTYS, they will eventually win and Moody's will upgrade the CTYS bonds.
My fresh evaluation of CTYS is based on:
* Bear, Stearns not selling their common stock
* Insiders except ex-directors are not selling^^^
* The correction to 6 from 9 is 1/3. This could be directly a result of an increase in CTYS shares by 30%.
* The bottom line is someone (serious institutional player) obviously supported the stock at $6. This support could not have come from usual market traders like us.
* Today was the "information day," although we did not receive any.
* If (as a result of more bad news) sellers will sell at prices less than 5 11/16, the BIG buyer will still buy as long as supply lasts for ask less 1/16. Then, the question is how many will sell at lower prices less than 5 11/16. Today was a play based on full information available to big players and if some small traders are hanging out, they will not be able to materially affect the price for more than a few minutes. The big sellers (who have all the information as of today) seem to be either gone or are unwilling to sell at any lower prices, given today's support at $6.
I MAY BE WRONG IN ALL OF THE ABOVE STATEMENTS.
Sankar
^^^ From the latest SEC filing:
As of October 9, 1997, 33,025,074 shares of Common Stock were issued and outstanding. Of these shares, 11,789,203 shares of Common Stock were available for resale in the public market without restriction or further registration under the Securities Act, except for shares held by affiliates of the Company, which shares were subject to the resale limitations of Rule 144 promulgated under the Securities Act. 21,235,871 of the shares of Common Stock outstanding were deemed to be "restricted securities" as the term is defined in Rule 144, all of which are eligible for sale in the public market in compliance with Rule 144. In addition, as of October 9, 1997, the Company had granted options to purchase up to 3,873,850 shares of Common Stock, of which 3,617,050 were outstanding, 225,800 had been exercised and 31,000 had expired.
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