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Technology Stocks : TAVA Technologies (TAVA-NASDAQ)
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To: edgedirect who wrote (6806)12/3/1997 8:21:00 PM
From: M. Frank Greiffenstein  Read Replies (2) of 31646
 
Offshore PP deals..

Edge, off-shore PPs are called Reg-S deals. And in most cases, the smell is strong, you can smell it all the way from the secret banks of the Caribbean. Reg-S investors are usually savvy short sellers who short the stock, they use the proceeds to make a private placement. They work out the math so that they win regardless if the stock rockets (unlikely) or plummets (what they hope for). Zitel is a very good recent example. The Reg-S deal was done at about $20. The stock is now around $11. You can bet the people involved have made out very well.

You short 1 million bucks of a bad company at $1/share. YOu take 500K from your short sale, go to the company and buy a million shares at special price of 0.50 cents. If company goes belly up, you pocket 500K. If company rockets, you sell your shares to cover, and keep the 500K you had left over. Typically however, the desire is for the stock to go down.

DocStone
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