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Gold/Mining/Energy : Donner Minerals (DML.V)
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To: Surething who wrote (1839)12/9/1997 11:43:00 PM
From: Big Shorty  Read Replies (1) of 11676
 
Surething - don't kidd yourself by believing that Canaccord and Yorkton buy their positions. Unless it is an inhouse deal that a team of their brokers have restructured, they seldom buy their position. Most often their position is derived by stock known as B-Warrants which they demand from the funded company when doing a financing. This stock is usually exercisable at the financing price. They then short against that stock in the promotional stages, selling that stock to the public on the way up. They always have their short position covered with the B-Warrants. Cant't lose. Those B's are usually exercisable for up to 12 months. Of course once an amount of stock equal to the B-warrants is shorted and their support withdrawn, why not short the deal all the way down to the price at which they cover with the B-warrants. heck of a deal. The B-warrant stock has no such hold period like the stock of the private placement from which it was derived.
It's very legal and very profitable. Usually once the B-warrants are excercised and blown out, the house support wanes off until it disappears. Or until the next round of funding for that company.
They are only doing exactly what the rules allow. The trick is to read the timing on these deals and know, what is coming, in what sequence.
Jim
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