Floorless Preferred Stock/Debenture Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Floorless Preferred Stock/Debenture

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Ignite44 who wrote (87)	10/4/1998 3:33:00 PM
From: Mama Bear	Read Replies (2) of 1438

thomas, sorry to take so long to get back to you. "You assume that the investor would be able to find a substantial amount of shares to short...this is a stock with almost no shares available and most held in strong hands." How do you know that? I have seen many stocks that were allegedly held by 'stong' hands dump. I'm not sure how these folks find their shares, but they do. Some suggest that they have arrangements with market makers and the shares are sold naked. Some suggest that it is done off shore, out of the purview of the SEC. Shorting naked would not be as risky as it seems, since the share creation to cover a short is guaranteed. "from what I have learned that this is a typical method of financing for bio-techs without established revenue streams." It is a typical method of financing by companies with relatively small chances of success. If success were guaranteed, or even well within a reasonable risk vs reward such terms would not be accepted. " North American Vaccine NVX for example is raising 25M thru this method and their stock has not collapsed. " NVX has gone from 30 to 10 in the last year. I'd call that collapsing. I have noticed that when people get it into their heads that their particular small cap is the next MSFT, or perhaps AMGN in this case, they will excuse every sort of red flag that pops up. Don't get me wrong, I've made the mistake myself. I learned about the destructive nature of these types of deals by being involved with FIBR. My, that management talked a good game. They were at 24 or so when I first got involved with them in Nov 1996. I think they're trading around 3 or 3 1/2 now. The most recent floorless they put on was in May of '98. The long holders argued what a great thing it was because it was written by Credit Suisse First Boston. The stock was 10 or 11 back then. Good luck, maybe IDBEF will be the first stock to use this type of financing and succeed of which I will be aware. But the odds are really stacked against it, assuming that the financing is in fact a floorless convert. Why isn't it filed with the SEC? The lack of filings on Edgar is another serious red flag about this company. I really don't need to look any further to know I don't want to be long IDBEF. Since it's under 5, there is really no point in looking to see if I want to short it. Barb

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next