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Technology Stocks : The New QLogic (ANCR)
QLGC 16.070.0%Aug 24 5:00 PM EST
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To: The Freep who wrote (18345)10/2/1998 12:29:00 AM
From: Eleder2020  Read Replies (1) of 29386
 
>>>OK, I might sound ignorant here, but this doesn't make total sense to me. Why? Well, how are the Reg D guys gonna make a big profit shorting a stock at 1 or 2 or even 4 or 5? <<<

Maybe they aren't interested in a big profit They get a 15%(profit) lock with extra shares as a premium(I guess you can call it interest) as part of the terms of financing with no further risk. The price they short at really doesm't matter to them . They are probably content with their 15%.

>>>Perhaps I'm just not clear on how the Reg D people get out of a short position.<<<

A)They would have to sell their long position to close out their short position for a net of 0% plus a small fee to the brokerage firm or B) they might be allowed to use their actual long shares to cover their actual short when they sell their long positions on the open market again for a net of 0% plus a small fee to to the brokerage firm.

Scenario A) would take two transaction and I guess would assume a tiny amount of risk(not sure of the mechanics): while B) would be just 1 transaction and boom a riskless short with a 15% profit.

They can do this everytime they get up to the 5% ownership level.Concwivably they would never have to cover their last short that would cover 5% of the Ancor outstanding stock.

Hope this makes sense, because I'm still trying to completely understand it
Ed
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