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Biotech / Medical : Biotech Valuation
CRSP 52.51+2.7%Nov 14 9:30 AM EST
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To: LLCF who wrote (155)4/12/1999 11:51:00 AM
From: Biomaven   of 52153
 
If anyone needs further convincing of the dangers of death-spiral preferreds, take a look at COCN. They just registered another 25+ million shares stemming from last year's $8m share offering of their floorless convertible. This about doubles their shares outstanding. Also, they recently requested a halt in trading to investigate trading activity - didn't say what it was, but I bet it was the convertible holders shorting like crazy.

Of course it hasn't helped that they've had problems in their trials as well.

If you just make the general rule to avoid stocks with these instruments in place, you might miss the occasional gem, but overall you will save yourself a lot of grief. They have the effect of severely magnifying any bad news.

Peter
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