KJ,
<<All IMHO. Let me know what you would do if you were one of the RegD guys>>
My thoughts differ from your's, a little.
<I want to own the maximum number of shares without jeoparding the company. I already own 700,000 shares, 5% of 14M shares outstanding. I would not sell or short at current price because I just converted at $1 and change>>
I think most of us are of the belief that the preferred shareholders own the maximum number of common shares allowed. I am not aware of any proof of this. The S-3 merely states the maximum number of shares they may own.
By going long, the preferred holders are assuming greater risk. They are in a much safer position holding unconverted preferred shares, or converting and selling.
Based on the comments from the Floorless Preferred board that George introduced to us, the safest thing for the preferred shareholders to have done was to short the entire underlying common shares. They would have had no trouble finding shares to borrow, because the offering prospectus was their collateral.
Clearly, they did not do this, at least not all of them, because the monthly shorting report has never come close to the convertible equivalent. I am assuming that any shorting by the preferred holders would be reported in the monthly figures. It would be interesting to find out why they did not short to the max.
The next safest action in my opinion is to convert Series C shares after selling. This approach also delivers high returns with no exposure to market risk.
If they are willing to incur market risk, it does seem that the last 2-3 months have been a good time to convert Series B shares. I've been led to believe that these investors are usually risk adverse, but maybe these guys are different.
Greg |
