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Strategies & Market Trends : Roger's 1998 Short Picks
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To: ted birnbaum who wrote (11534)7/15/1998 9:01:00 AM
From: JGarly  Read Replies (1) of 18691
 
Teb

thanks for the heads up on ONHN.

I can add a couple of observations to your analysis.

1. After the injection of cash from the placement of the convertible stock ONHN now sports a higher book value per share than AMZN so that obviously isn't a concern for investors :-)

2. Your pump and dump assessment looks reasonable. Though if there are blocks going off it is probably a broker pushing it rather than a newsletter hypster.

3. Terms of the convertible would seem to favour the holders waiting a few months before any arbitrage. The discount to market increases to 5% on Oct 8 and to 10% on Jan 5.

4. Advantage Fund II(investors in the convertible). I only remember encountering these guys once before in this type of deal. That is in TERA where they have held a similar investment for several months without engaging in the aggressive arbitrage that is so beneficial to short sellers.

5. You're right about this company bleeding cash. According to recent sec filings they have enough cash to last only until the end of the year. This will mean another round of financing in the near future, which could also help to explain why the convertible holders are not trashing the stock yet.

6. short against the box. No need to on this one, it is on the nasdaq small cap market so no uptick is required to short it.

In summary I'd have to agree both with your assessment of short term direction and ultimate fate. Looking at the mm screen this morning before the open I see HANF alone at $9. Has he been responsible for moving this issue along? Who has been featuring prominently?

Jon
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