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Biotech / Medical : Oxford Health Plan (OXHP)
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To: Premier who wrote (1691)7/6/1998 4:58:00 PM
From: Diamondcutter  Read Replies (1) of 2068
 
Do you have some examples from the article? Also, what is th AAII Journal?

I'd be shocked if TPG was short OXHP common. TPG took preferred stock because it allows them to profit on the upside in the valuation of the company in the turnaround (hopefully) yet retain priority over common equity holders in case of liquidation.

With their TPG convert ownership, they could care less what the stock does short term as their conversion rate is fixed. People who buy converts and short the common are doing so to capture the excess dividend of the preferred. As management, TPG does not want to cap their upside by shorting the common if they believe they can succeed.

Your comment on avoiding convert issuers would be valid if the securities were sold to the general public, but I don't think it works here in this situation.

Diamondcutter
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