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Strategies & Market Trends : Shorting stocks: Broken stocks - Analysis
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To: chester lee who wrote (2227)4/22/1999 1:21:00 AM
From: Q.  Read Replies (4) of 2506
 
Chester, OCOMD my plan is to let the stock fall and not set a limit to cover.

The unique and marvelous situation here is that once the stock falls far enough for the secondary to be 'postponed', it's likely to continue falling to zero.

Why cover just before the stock falls off a cliff?

There's no way this company can stay in business without the secondary. It basically says so in the prospectus. But a secondary isn't going to happen at a price below $3, I'd bet. So I won't set a limit to cover at $3. Or at $2 or $1 for that matter.

As far as what Southeast Research Partners is doing, I don't know. Obviously they aren't being successful in stabilizing the stock price. Maybe they are too busy promoting PNDA?

Out of curiousity, I checked ipocentral.com to see whether Southeast has done any IPO's. (I checked this since I didn't have any easy way of finding out what has happened to stocks they did secondaries for.) There was only one listed, and SERP wasn't even the lead underwriter. It was the third underwriter listed. Moreover, the offering never came off. The co. filed its S-1 for the offering last year, and the offering was 'postponed', according to ipocentral.

I have a suspicion the secondary offering for OCOMD will be 'postponed' as well.
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