MEMC INT'L. (WFR -NYSE) The Sleeping Giant? Message Board

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Technology Stocks : MEMC INT'L. (WFR -NYSE) The Sleeping Giant?

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To: SE who wrote (4291)	3/22/1999 10:23:00 PM
From: Carl R.	Read Replies (1) of 4697

Scott, I think that this is indeed very much the same as a warrant call, which I have also (barely) lived through, and do not care to relive. <VBG> And this is exactly the reason I bailed out of this stock at around 9 and have been waiting for the final terms to come out. It will be as if hundreds of thousands of calls were suddenly written. Some will sell them for whatever they can get, and arbitrageurs will buy them and short the stock (not 1 for 1) to maintain a neutral position. They will do this because the rights will be priced below fair market value due to the large number of sellers. This will for a time have a damping effect on the stock (as it did today). I will have to contemplate for awhile to figure out exactly how to play the arbitrage/hedge position, but suffice it to say that I do not believe that the stock will get above 6 7/8 prior to expiration regardless of what happens from a fundamental perspective in the meantime. Good luck, Carl

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