Summary for the thread.
Lets review and update the "Castle Creek" floorless bandit theory
Larry has stated that Castle Creek can't lose on their Valence investment of $15M. He says that
CC had an opportunity to lock in profits, and they did.
Well, I agree they had ample opportunity in November, December, and January, to convert all the preferred shares and exercise all the warrants issued in the first tranche last July, and sell all the common shares obtained. If they had done this at an average price of around $8.50, then they would have locked in a profit of over $3.0M on the converted preferred, and picked up another $0.75M on the warrants. This would have represented a 3.75M / 7.5M = 50% return on their investment in only six months or so. They could have also locked in the same profit, by shorting 1.7M shares.
Larry, with his day trading mentality, and looking at this situation from the point of view of a floorless bandit, says that CC had this opportunity, then they must have done this. In his POV, this was why they invested in Valence in the first place.
But the reality is different. The filings clearly show that CC hasn't converted the preferred, and the open short position shows that CC can't have shorted anywhere near 1.7M shares. So this means that CC passed on the opportunity to lock in a 50% profit in six months!!! They must think they can make much more money by staying "long" on Valence!!! It looks like CC invested in Valence because they thought Valence would succeed, and is looking for a much larger return than the quick 50% pop.
Even in the last several months, CC could be selling shares at $7.10+, and locking in a 20+% profit in only 3-4 months , by selling 1.7M shares against the second tranche. But they don't seem to be doing this either, as they haven't converted any preferred and the short position wasn't increasing at the last report.
Nope, the theory that CC is out to sell short or convert and sell Valence shares on the market as soon as they can lock in sizeable gains like this, is wrong.
Castle Creek is strongly bullish on Valence. And the negative posters on this thread can't claim that Castle Creek is some unsophisticated investor. Castle Creek joins a pool of very knowledgeable and experienced rich insiders in buying Valence stock. Altogether, they have bought over 5M shares over the last 12-13 months. This increases their ownership of the company to about 10M shares (of the approximately 30M shares that will be outstanding when all the converts and warrants are included).
Altogether, an amazing display of insider and experienced investor confidence in Valence.
And if Castle Creek isn't shorting much (if any), then there are a lot of nervous shorts out there, who will be in a real bind when positive news comes.
Paul
|
