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Technology Stocks : MRV Communications (MRVC) opinions?
MRVC 9.975-0.1%Aug 15 5:00 PM EST
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To: Sector Investor who wrote (11278)11/26/1998 12:37:00 AM
From: George Dawson  Read Replies (1) of 42804
 
Sector Investor,

I agree with you completely - the convertible debt offering is associated with the jump in the short position. In fact, I posted some links to you about this issue in the past:

Message 6190783

I expressed my concerns about this in the past - mainly because I hold stock where the shareholders were blindsided by a floorless convertible where the short position ballooned and the stock price plummeted before we could bail out. Before anyone points out that this is not a floorless convertible preferred share - I am well aware of the point that the conversion price is fixed. I am also well aware of the fact that the conversion price is well above the current market price. I am also aware of the fact that this is acceptable financing. Please refer to the hedge fund link in the above link that describes how to use floorless convertible bonds to make money. Can anyone think of a way that shorting would benefit the convertible debt holders?

My thinking is that you can borrow shares against the convertible to short and then cover with inexpensive shares accumulated at the current market value. At some point from your data, this could result in a 60 - 70% gain. It might also account for some of the fluctuation in the short position.

How is that for a theory? Any financial experts out there think this is viable?

George D.
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