Floorless Preferred Stock/Debenture Message Board

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Strategies & Market Trends : Floorless Preferred Stock/Debenture

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To: Zeev Hed who wrote (103)	10/9/1998 1:01:00 AM
From: Dave K	Read Replies (2) of 1438

Thanks all for sharing invaluable insights. I have a few questions related to these financing deals which I cannot resolve. Can you color this in a little further ?. First Unresolved: What is the management's real "position" when they seek these debt offerings ?. The management should ? be well aware that their company's market value will evaporate, simply by observing the results of many other companies. Specifically, when you see the Chairman/CEO own close to 25% of a company stock and continue to make periodic large open market purchases... at the same time several convertible deals are being inked over the years. I question whether he is really taking a beating with the rest of the float holders or is it possible he is capitalizing on the frenzy. If so how ? Have holders of other Death Spiral Specials observed similar large insider ownership or purchases ? (usually it's one individual, the Chairman/CEO). Second: What is the banker's position when they arrange these deals ? Especially when they are also the market makers. Do these folks consciously retain an inventory of stock knowing it's value will be eventually be reduced to a faction or participate in the rewarding strategies ? This may (or may not) be limited to the lower tier investment bankers. Who really controls the direction of a stock ?. Today I observed the short position on my best Spiral Special (I have several) jumped 300% August/September, just as the due dates of two of the convertibles are due here in October. The third fresh convertible package is still ticking. The stock price has fallen from $6/$7 to 25c in three years since the first deal was cut. This may be one for the textbook. (To be fair, my observations were based on small cap arena). Thanks Dave

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