Any info about Iomega (IOM)? Message Board

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Non-Tech : Any info about Iomega (IOM)?

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To: Iceberg who wrote (17726)	3/8/1997 3:31:00 PM
From: george eberting	of 58324

ALL: Large IOM short interest reconsidered. WSJ article Mar. 6, 1997 pp C1 and C20 indicates short position in IOM (and other firms) not necessarily indication of bearish opinion but rather a hedging strategy for holders of convertable preferred. As I understand it, if you hold conv. pref., you hope the common will rise in value to some pre-specified strike price then convert your preferred to common at that time, sell your common at that high price and thus realize your profit. But long before the common reaches the strike price you are sitting there holding a bunch of conv. pref. You ask yourself, "what if the common never rises in value and I can never convert and realize my profit." Being a cautious sort, you sell the common short. So, if it does go down, you make money anyway. But you make it my covering (if you choose to do so) at the lower common price. But you don't have to cover, because if the price of common goes up, that makes your conv. pref. more valuable. So, the large short position in IOM at this time does not hold the same promise for an exciting short squeeze because a lot of these shorts don't have to cover. That's the way I understand it. Any thoughts, anyone?

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