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

To: Zeev Hed who wrote (918)	8/30/1999 2:59:00 PM
From: mst2000	Read Replies (1) \| Respond to of 1438

Zeev - I understand that Rose Glen can use the stock as collateral if they want to establish a short position as a hedge, but don't they still have to pay interest at margin rates on the full value loan of the stock they are borrowing to sell (until it is repaid)? And does that not diminish their return? So while the hedge offers significant upside potential if the stock price goes down, it does so at the expense of margin interest which will diminish the return if the stock goes up? I ask this knowing (i) that for the moment anyway, the stock price is not rising, and (ii) it is by no means "certain" that it will rise in the future, or at specific points in the future (lest I create the misimpression that I think ATG is a "lock" of some sort -- just a very interesting small cap with great potential that goes hand in hand with a fairly high degree of risk). And I also recognize that, as a cost incurred to eliminate downside risk, the hedge may well be worth it -- but there is a cost that eats into the return, yes? Thanks. Mark