copy some long posts from Yohoo. hopeful nobody accuse me of copy right infringe.
From guardian_94109:
"I'm a relative novice when it comes to funny business in the market so I can only guess. Nevertheless, as of late I been thinking about how one actually drives down the price.
Similar to your observation, I have noticed the "tiny" bid that drives the price down in the morning (you might also note that on days when ASTM ends "up" or "even" there seems to be a "tiny" bid in the late evening that drives the price up !). As for the presumed accumulation at the lower price, I wonder if in fact these shares are the one that are later used to drive the price down on big sells.
Yet regardless of the actual mechanism for driving the stock down, assuming one is in play, it seems that the economics of the whole "game" must also factor into account the "convertibles." Namely, the low volume share price swings have trememdous leverage since only a small amount of capitol is involved. Therefore if a move was being made to drive the price down, even if a loss was incurred in order to drive the price down, the amount of capitol gained in a conversion would more than make up for the loss. There is also the pure short angle, so I'm told, whereby even if one incurs a loss in driving the price down, they cover by shorting. Shorting also works with the convertibles since the converted shares cover the short.
Awhile back I posted a link to the "floorless convertibles." You might want to take a look. I seems that one issue that must be addressed, assuming a low price conversion occurs in the future, concerns what the "converter" plans to do with his shares. A portion is likely to cover any shorts, however what happens to the rest. If the perpertrator is long on ASTM he will hold a portion. However, he might also unload based on "good news." If conversion occurs at $2/share, it seems that they might be able to unload at $2.5-3 range. This scenario seems to lead to a quick profit for the converter who will no longer have his money alocated to common stock, which us longs know is currently underperforming! As the converter need only convert a portion of the 4 million outstanding, it seems that this cycle could repeat itself if the time to company profitability is lengthy.
Obviously all of this is IMO. However one thing that I seem to have concluded from following ASTM, and pumping money into it, is that until money is generated by a company, anything is fair game and the insiders clearly have the edge. Being long on a stock eliminates much of this, however the dilution effects could seriously erode shareholder value. I am closely watching volume and price (I don't have short access outside of yahoo) on this one before I make another purchase.
Best of Luck Longs"
From CHAPK:
"I read your link on floorless converts when you first posted it, and was encouraged to reread the annual report paying closer attention to the terms of the convertible issues.
Last July Aastrom sold $5 million worth of of converts, the 1998 Series I to "one investor" (unnamed). These are convertible after March 31 at the lesser of 1) $4.81, or 2) "a price based on the market price.... prior to conversion"-- the annual report does not mention the date of the price which would determine the conversion price. "With limited exceptions" conversion is after March 30. It looks pretty obvious that the convert price will be less than $4.81-- since the co. has set assude 3.8 million shares to cover this and a future convertible issue, I estimate the holder may try to capture about 2.5 million shares for conversion, which would make a $2 share price to their advantage($5 mil/2.5 mil shares = $2/share). As suggested in your link, the holder of the Series I may already have shorted enough so that a substantial profit is locked in, if they can convert at less than, say. $3/share.
As for the Series II, the "one investor" has promised to buy an additional $3 million of Series II Convertibles, if Aastrom's price exceeds $6 for a "specified duration"(not specified in the annual report) from Oct2, '98 to July 2, '99.
On the whole, it looks like it's to the holder's advantage to see the stock near current levels 'til April, and to Aastrom's and perhaps the holder's advantage to see it above $6 after conversion.
CHAPK "
From Daedalus_OB1
"And that one investor is Ed Wood.
Just one thing, I don't think he (the single large shareholder) is shorting this down. Rather I think a seperate holder somewhere is just floating enough stock out there at the right time to bring the price down each and everytime it starts a little uptrend. These shares were probably bought up a little at a time over the last few months.
Remember the float is very small on this one. There just are not that many shares out there.
Now please keep in mind, that all this is just my opinion and I have not one single fact to support it, but it just might make sense.
Anybody checked out COBE's homepage? Why in the world do you think these two groups broke up the marketing deal they had? It was a match made in heaven. I just can't figure it out. What makes it even more unbelievable is that Ed Wood is the president of COBE.
Me thinks Ed wants the whole company.
Lets do the math. COBE owns 20% Ed Wood owns 20%. I believe that Mr. Wood is the single investor (kind of like the lone gunman don't you think? LOL) with the potential to grab 5 millin shares or about another 20-25% of the company. Thats a majority, and even though he would not personally control the 20% which COBE owns, I would think at least as their president that he could get their share votes to go his way.
Something to think about.
Good Luck "
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