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Technology Stocks : The New QLogic (ANCR)

QLGC 16.07

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Aug 24 5:00 PM EST

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To: George Dawson who wrote (17954)	9/7/1998 9:06:00 PM
From: Greg Hull	Read Replies (1) of 29386

George, Another question. You wrote: All of the shorts need to cover before they convert and go long. As John G. pointed out this is usually done for a brief period of time to minimize the risk on the short side. That risk is not high enough the price stays depressed while they load up on shares with the conversion. I would guess the narrow price range is necessary if you want a substantial short position while converting at the same time. Could you walk me through this? Why do the shorts need to cover before they convert? I understand that they would want to short prior to converting, but why would they need to cover before converting? Since they are limited on the number of shares they can own long (actually, they are limited to a percentage of outstanding shares), they might have to sell shares before they are allowed to convert more preferred shares. I assume they can use the common shares they own long to cover their short position. Do you or anyone else know if my assumption is correct? Greg

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