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Strategies & Market Trends : Floorless Preferred Stock/Debenture -- Ignore unavailable to you. Want to Upgrade?

To: Mark Ivan who wrote (865)	8/24/1999 8:32:00 AM
From: RockyBalboa	Read Replies (2) \| Respond to of 1438

The calculus may be different. If they short a number of shares from $2 to $0.2 down in a linear way (just an assumption, a geometric decline is more suitable) and return their loan money of $400k, but have conversion/registration rights for, say 2MM shares at 0.02 (the $400K) - the then applicable conversion price with how many shares do they end: Shares shorted = $400K * (1/2) * ($2 - $0.2) ~ 444K shares. So they would end up with 1.56MM shares AFTER covering their short positions. If the price decline is more geometric (or linear in shorted volume * price) then they would perhaps short more shares in total for $400k but in no case all the shares (or $$$ amount) at the conversion price, 0.2. Again leaving over a number of shares outright with a zero base. Got it?

To: Mark Ivan who wrote (865)	8/24/1999 8:42:00 AM
From: surelock	Read Replies (2) \| Respond to of 1438

Mark, > If they made all their money by shorting the stock to death, then the 2MM shares (or a large chunk) they received would have to be used to cover their short position. Thus, how big of a shareholder could they be?? They only need to break even on their short to make this scheme work. Don't forget, they have all the proceeds of their shorts. They use those proceeds to buy back their shorts, at the same average cost if possible, end up flat on their trading, and holding a large cheap block of stock. Thanks to their own buying, the stock recovers to $2.00, so TK is now up 10 times their money, becomes a promoter of the stock, and unloads. Don't think it doesn't happen.