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

To: Zeev Hed who wrote (14357)	9/7/1999 7:01:00 PM
From: kolo55	Respond to of 27311

Those 170,000 shares are in the "bag". I'm not sure CC is going to let them loose into the "bush", just to go to the time and expense of tracking them down and capturing them again. Especially if there are some big beasts (deep pockets buyers) in the bush who would just love to strip CC of any shares they have left at a nice low price. If CC has some nice profits from shorts sold against the second tranche in the $7-8 range during the time period Jan-Jun, then its likely they will want to lock-in those profits while they can. So it's highly likely that they will start buying stock as soon as they make the decision to convert. I do think CC will carefully review the probability and expense of trying to drive the stock down below 4 in an effort to improve the conversion price significantly, AFTER the current opportunity window lapses. Based on the volume and price decline rate over the last month or so, that increasingly looks like a low probability and expensive ploy. If they do decide to make a push to drive the stock price down, now is the time to try it. After the current window lapses by the middle of next week, they will need to start from a higher price level, with most of the weak hands already stripped of shares, and with a bunch of bulls out looking to capitalize on the end game. I think its much more likely they decide to convert, and go long to capture the post-conversion bounce, then they will initiate a delayed push on the stock price in another week or two. Incidentally, when CC starts buying, this will leave a lot of naked shorts exposed up to their butts. More on the naked shorts position in my next post. Paul

To: Zeev Hed who wrote (14357)	9/7/1999 7:13:00 PM
From: Dennis V.	Read Replies (1) \| Respond to of 27311

Zeev, I don't see anything wrong with Paul's calculations. They stand on current data, including numbers published in the SEC docs. His speculation is conservative, not excessively bold or problematical. I don't see how he could go forward, responsibly, in the direction that you suggest. Not saying you're wrong, but it could be an excursion into never never land to take your remarks, quantify them and offer as reasoned speculation. However, he could surprise me (VBG).

To: Zeev Hed who wrote (14357)	9/7/1999 7:44:00 PM
From: kolo55	Read Replies (4) \| Respond to of 27311

What is the number of naked short shares out there? This is an interesting question. Unfortunately we don't know for sure. But we can make some reasonable guesses. The last short report showed 2.47 million shares short as of August 9th. Source: biz.yahoo.com If we assume that in the 20 trading days from August 10 to last Friday, the shorters dumped an additional 25,000 shares a day, then another 500,000 shares have been shorted. That means that the short position could quite likely be close to 3.0 million shares. This over 10% of the outstanding shares at this point, and is likely over 15% of the float. CC has almost certainly shorted the 1.33 million shares required to fully hedge the first tranche. If CC hasn't been lying to Valence, they didn't sell any shares in August, at least through August 24. The most they could have shorted in the last nine days is 270,000 shares. This gives CC about a 1.6 million share short position. (They may have also shorted against the second tranche prior to the July 27th date, but for the moment let me ignore that.) If CC is short around 1.6 million shares, this leaves naked shorts with about 1.4 million shares short. If they decided to cover at a rate of 50,000 shares a day, it would take 28 days to cover. Unfortunately we don't know CC's short position accurately. But they do, and I am sure they will take this issue into account when they make their decision to convert. (This is one more reason why they should be forced to disclose their positions monthly in line with the intent of the SEC regs.) If the naked short position is as large as I estimate, then this could encourage them to go long to play the conversion bounce. This looks more and more, like all the elements of a short squeeze are in place... and I haven't even mentioned the possibility of a Valence PO announcement. Paul