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

To: mst2000 who wrote (910)	8/29/1999 10:50:00 AM
From: Zeev Hed	Read Replies (1) \| Respond to of 1438

Mark, I think that shorting in a stock does create pressure on the stock by disturbing the then existing balance between supply and demand. In normal situations, the short position is a reservoir of future buying and if the financial condition of the company is "stable", this shorting will eventually be covered reestablishing the balance between supply and demand. The reason in the case of ASTN this may not work is because there is a possibility that the shorting is a simple hedging, in which the $20 MM in convertible debentures is used as collateral. In this case, the covering of the short position may not be providing by the short going into the market and buying the borrowed shares, but converting their debentures and delivering these against the short position. In essence, the debenture creates an overhead supply of about 2 MM shares (at current prices and much more in the price decline) which is a real imbalance between current supply and demand. This imbalance can be "cured" if the demand increases well above that new supply, supposedly, due to excellent execution by management. My fear is, as I have mentioned before, is that we have entered into a period of general volume contraction, and that must have some kind of an impact on the degree of success of the launch of the new electronic trading system. Zeev