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Technology Stocks : VALENCE TECHNOLOGY (VLNC) -- Ignore unavailable to you. Want to Upgrade?

To: Larry Brubaker who wrote (13855)	8/19/1999 10:53:00 PM
From: Zeev Hed	Respond to of 27311

Larry, you are getting "dangerously" good in your analysis <VBG>. Right on, count the shares to see where the conversion process is going. Zeev

To: Larry Brubaker who wrote (13855)	8/20/1999 12:41:00 AM
From: kolo55	Read Replies (3) \| Respond to of 27311

This seems like a game of musical chairs. As long as the music plays and the stock falls, the shorts dance around. But as soon as the stock firms, Castle Creek will have to convert, or pass on this opportunistic buying period. Essentially they will have to decide if they want to pass on the million dollars they have in hand in improved conversion, or gamble that the stock will hit a more severe sell-off in some future ten day period. If CC decides to convert, then the possibility exists that they decide to cover some of their shorts. After all, they're not stupid, and they probably know that news of the conversion will have a positive impact on the stock price. At that point the music stops, and the shorts scramble for chairs (I mean shares). The selling Wednesday in the last ten minutes was intense... I know, I bought 5000 of the shares they threw down. They caught the bulls unprepared. Thursday, the bulls were there prepared at the close, and took the 60,000 shares or so offered up in the last 15 minutes. If 558,000 shares sold during the day couldn't keep the price below 5, I don't see how the 35,000 shares CC can normally offer up each day will. If the share price stays around 5 and change, then there isn't much incentive for CC to keep selling shares. The conversion price is already 5.16, and selling additional shares to try to drive the share price below 5, doesn't seem like it will work. This puts a definite window on the timeframe that CC has to convert and catch this low stock price period. In order to include the last two closing bid prices, they will have to convert within the next eight trading days. It is quite likely they could decide to convert in the next several trading days, and stop selling shares. In fact, if they would have as much of four days to buy, before they have to submit their decision to Valence (and probably have the conversion decision become public). Say they decided that today was the last day for them to sell, then on Friday through Wednesday they could cover some short shares, then notify Valence on Thursday, and still get six low priced days, and a conversion price of around 5.16 a share. There's no rule that CC can't make money on the bull side... this looks like a pretty attractive proposition for them. Add to this the following: - NASDAQ short interest is revealed next week - the possibility of a VLNC announcement of a PO It looks to me like the risk/reward scenario has shifted significantly, especially for shorts who are in the money. I suspect some of them are getting ready to take the money and run. This appears to be prudent. Also longs who sold out at higher prices, fearing the variable conversion kicking in after July 27, will be looking for a re-entry point. All said, this could really accelerate to the upside, once it is clear the stock price has firmed. Paul