As I posted on Yahoo, in response to Submariner:
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Thanks for the clarification. From what you said, that means that how much profit the preferreds make on their short selling depends on how much downward MOMENTUM they can cause in the stock price in the 3 days prior to converting. If they sell and cause a price drop, but then the price recovers because no one else sells, then their last sale price will also be the basis for their conversion price, giving them only a 5% profit. On the other hand, if they can start a selling frenzy, and not end it, they can reap the benefits of other peoples lower priced sales.
How the shorts, who are holding 3M shares, will react to these all time low share prices will be very interesting then, and will also have an effect on how much profit the preferred's get. If they start buying, along with the company, thats ~4M shares that the two will be trying to buy(some of the shorts are covered by the previous preferred offering; I assumed ~1M shares are not<NOTE: did not mean to have the word not here!> covered for the hell of it). Or maybe some of the shorts are shorted totally for hedging, and have no intention of buying back at any time soon. I guess we'll see in a week.
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Jim, how do you post there without reading anything? Or is it just a matter of being tired of the shorts attitude and not bothering? None of them responded to my above post, which makes me think that they don't have a good answer as to where the selling momentum will come from.
On the point of selling, yesterday was the first possible short sell date for conversions to start on June 1. Yes the price hit a new low, but the market was also down, and volume was low on the stock. I am curious to see what happens over the next several days.
Kevin |
