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Biotech / Medical : ARIAD Pharmaceuticals -- Ignore unavailable to you. Want to Upgrade?

To: Biomaven who wrote (627)	8/9/1999 5:03:00 PM
From: LLCF	Read Replies (1) \| Respond to of 4474

<As of the date of the Proxy (end of May) there had been no conversions of the Preferred. This likely means that there was no shorting by them prior to the beginning of May. Thus any decline in the stock price prior to this date wasn't cause by the Preferred Holders. > I respectfully disagree with this statement... the owners [from now on "bad boys"] of the preferred can convert to common based on the lowest 4 closing bids in the last 22 business days. Therefore it appears to me that there is absolutely NO reason to exercise your option unless there is a violent spike up in the stock. Lets say they started shorting @ $3 in Feb or whenever it became possible [+22 days to get a strike price to work with] if the low 4 bids at that time are 2 3/4 they start shorting @ $3, but don't need to cover [exercise] untill one of those 2 3/4 bids passes... buy then they've sold some stock and have some 2 1/2 bids in their data base... then 2 3/8 bids... AND HAVE 22 BUSINESS DAYS TO DECIDE! The beauty of the scam is you're protected against a move up... so you just keep letting it ride. The lower it goes, the more valuable the position becomes because you can ride your short. Hence: < (Preferred holders will generally short just prior to converting, because that way they are guaranteed a return no matter what the sock price does)> Becomes: There is no need to cover, they're locked in anyway. There's only a continued impetus to keep getting another lower closing bid in the database [of 4 lowest bids in 22 days]. AND they can afford to back off and let the stock lift sometimes because they've got lots of days to play with... weeks! We could check the chart to see if they're have been any runups that they would not ride out. <BTW, people shouldn't assume that the Preferred Holders are somehow out to destroy the company - they will in fact do better if the company does well.> All though I agree with the face of this statement, I will also say that if they are bullish on the stock, and want to own as many shares as possible have all the reason in the world to smash this thing down and take as much stock as possible. So while they want the science and management to succeed, they may also want to take as much common from the shareholders as possible. I wouldn't want to keep a tiger in my house to keep the mice down. <As of the date of the Proxy (end of May) there had been no conversions of the Preferred.> This may indeed be very bad news... Just put into your spreadsheet the following closing bids and see what % of the company these bad boys can take: 1/2, 1/4, 1/4, 3/16. A real possibility in a market downdraft. I'm almost more scared if these guys LIKE the company and the science. By the way, does anyone know if there are 5,000 or 10,000 of these preferreds oustanding... the 10Q I read (3Q98?) stated 5,000 to start with another 5,000 manditory. Now, in closing, I don't mean to get all shrill [already have! sorry] but the possibility of these guys buying 10 million dollars worth of stock at .25 per share exists theoretically... and with the stock where it is now is starting to look realistic. I am not at all convinced that these "bad boys" are not out to destroy the common shareholders [not the company... they may want that]... does anyone know any of these "spiral" buyers???? DAK