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Technology Stocks : Applied Magnetics Corp

APM 1.340

-4.3%

9:43 AM EST

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To: Frodo Baxter who wrote (11932)	5/16/1998 9:26:00 PM
From: Tom Simpson	Read Replies (3) of 12298

>Another way to look at it is that the shorting pays for the bonds, so >that they get their interest with NO principal. Thanks Lawrence, "Another way" is just the one I was wondering about. I'm thinking.... 1. I buy 100k in notes which gives me 6% per year and dibs on any stock gains over 28.75. 2. If I get gains, at any time I can freeze them by shorting enough shares to give me 100k in cash which in turn makes me 5% at money market rates. I've now got 11% coming in on a 100k investment and I still have a little exposure to the equity upside on the residual shares I didn't short. Something doesn't seem quite right....even for an institution. Seems like somewhere somehow there would be a rental charge for the borrowed shares coming out of this thing. >Economically, converts are nothing more than junk bonds without the >stigma. What irritates the hell out of me in this case is that I didn't get a shot at buying the damn things. In a lot of ways they look more like a form of common stock with preferences....namely a 6% dividend and full participation on the upside. Best Regards....Tom

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