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Microcap & Penny Stocks : DCI Telecommunications - DCTC Today
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To: Juli who wrote (6879)7/20/1998 10:19:00 AM
From: Grantcw  Read Replies (2) of 19331
 
Jewel,

You're right about the floorless convertibles generally being a bad deal to do. I used to belong to a short seller group that would search the S-3 filings each day looking for stocks that had large floorless convertibles selling at a large discount to market. We would then short these stocks, sometimes for big gains in short time periods.

A restriction placed on the shares is good. It is also good if they aren't able to short DCTC into the ground before they actually convert their shares. This is how most of the damage is done. The holders of the converts short a large amount before they are allowed to convert as a hedge in case the price goes up. They then drive the price down, allowing them to get more shares in the long-run due to the price being lower.

If the shareholders aren't allowed to short and the convertible is restricted for a year, I don't see this option as too bad of a deal as long as we can sell this puppy before the restriction is over.

See ya,

Grant
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