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Strategies & Market Trends : Death Spiral Preferred Thread
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To: Prof who wrote (26)10/4/1998 4:36:00 PM
From: George Dawson  Read Replies (1) of 47
 
To all:

I would like thoughts on unwinding the short against the box position if you are a convertible preferred owner. To clarify, I have a long position in the same company as the convertible preferred owners - Ancor Communications (ANCR). The consensus on our thread is that the convertible preferred owners seem to be converting and then shorting these shares. This has resulted in the short position increasing dramatically over the past few months.

One of the points discussed on this thread so far - is how this mechanism locks in a specific profit and how many of these share holders are not really interested in a long position in the company. Does anyone see it as a mechanisms for keeping the share price low enough to allow for maximum dilution of shares? In that case you could cover the short shares with low cost converted shares and have an immediate large long position. Are there any known precedents for this type of deal?

Thanks,

George D.
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