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Non-Tech : Any info about Iomega (IOM)?
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To: Joan Osland Graffius who wrote (7505)9/24/1996 11:50:00 AM
From: IceShark   of 58324
 
Joan: You are mistaken as a general principle as to shorts not being forced to cover in the open market as a result of having their borrowed shares called. While I'm not famililar with specific agreements whereby large holders lend out shares it would only make sense that the "contract" would have a termination event which was NOT totally dependent upon the short closing his position. Anyone familiar with "typical" large lending agreements?

As I understand it, CUBE recently went through this situation when large lenders began calling back shares, various brokerage firms were unable to borrow replacement shares for their short clients and as a result they then proceeded to tell their clients to replace the borrowed shares by such and such a time or they would do it for them. It wasn't pretty for the shorts that got called. In theory (and sometimes in practice) the same thing can happen if a brokerage firm's long position clients began asking for delivery of shares held in their margin accounts. It is a defensive tactic longs use when battling shorts, namely, remove shares from the available float. Obviously, this is more effective the greater the ratio of shorted shares.

In other words, given the right conditions, the short seller is anything but in the drivers seat. He can be screwed, blued and tattooed, as the saying goes.

Regards
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