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

To: Zeev Hed who wrote (14505)	9/11/1999 11:58:00 AM
From: kolo55	Read Replies (2) \| Respond to of 27311

Zeev,be careful about twisting the facts to suit the theory. Instead, you might want to consider modifying the theory to fit the facts. This week you attempt to explain the rally as "short covering" by CC, although Rich Wolf presents quite a bit of "tape" information that contradicts that. Also your newest interpretation flies in the face of logic: - How could they significantly cover shorts in only a four day rally, after five weeks of unrelenting downward selling pressure? - Why would they reverse direction when they needed to keep the conversion price dropping, so the number of shares in their arsenal keeps increasing? - If the selling coalition were the major sellers, who sold the shares to them at such low prices when they began buying? No, Zeev, the evidence is strongly against the theory that CC covered a lot of shorts in this rally. The "death spiral" theory seems to keep ignoring the fact that there are deep pocket investors in Valence who will support the company, if they believe the fundamentals are improving. And all the huge insider buys over the last year show this to be the case. This is a major element that isn't factored in to the normal "death spiral" theory. I offer you this quote from Leo Tolstoy: "I know that most men, including those at ease with the problems of the greatest complexity, can seldom accept the truth if it be such as would oblige them to admit the falsity of conclusions which they have proudly taught to others, and which they have woven, thread by thread, into the fabric of their lives. Everyone speaks of changing the world, but no one wants to change himself." Have a good weekend. Paul

To: Zeev Hed who wrote (14505)	9/11/1999 12:08:00 PM
From: Mark Johnson	Read Replies (2) \| Respond to of 27311

Zeev, it's Rosh Hashanah..... if you have even one ounce of civility cut out the death spiral bullshit! Have a Happy Holy Day and Happy New Year!

To: Zeev Hed who wrote (14505)	9/11/1999 1:14:00 PM
From: Harold Hertzfeld	Read Replies (1) \| Respond to of 27311

"When one sells short, one gets paid". Selling short releases no funds at the time of the short sale. Only if the stock moves down after shorting is there a release of funds to the account. And, if the short goes against the investor, i.e. if the stock goes up after shorting it can sop up a lot of cash from the account as the short position is marked to the market every day. So if a short sale was profitable and then went the other way there would be a recapture of those released funds by the brokerage firm ...and then there would be further calls for more funds or security as the stock continued to climb. And as there is no ceiling on the price of any stock there is no limit as to how much an investor can lose by shorting. Without a discipline one could lose his house. Harold

To: Zeev Hed who wrote (14505)	9/11/1999 2:21:00 PM
From: Rich Wolf	Respond to of 27311

Zeev, you are right, I spoke too loosely when I used the phrase 'spend money.' To clarify, I was referring to the risk they bear that they could be shorting below their final conversion price, combined with the opportunity cost involved in shorting at such a low price (versus staying long those shares and selling them higher), combined with the extreme risk that for some reason they may not get as many 'extra' shares from a conversion below the current fixed price (re: the question of why they are letting the $4.4 price slip away, when they had it in the bag). The assumption that they can force the price down to $4 3/8 again and hold it there for 6 days out of 10 seems quite extreme, as Paul has explained. Their 'cost' do do so (my loose 'spending money' phrase, sorry) is equivalent to deficit spending with the assumption that inflation in the number of shares they obtain in the future will pay the bill. As we've discussed here, the players may have miscalculated in the extreme, and are now quite exposed. This is especially true if CC negotiates a 'deal' with Valence independent of the current fixed conversion price. Then you said: "If the he total short position is smaller than the underlying floorless allows for, the money from additional shorting is all profits, not expenses." This is only true in the end if the total receipts from selling and shorting the stock are higher than the price paid for the shares (decided upon conversion and also in the open market for other purchases). If they are unable to obtain as many 'extra' shares as they shorted, then they are forced to close their short position from the shares they essentially bought at the higher fixed conversion price. The extent to which they must do this is the extent to which they have actually 'spent' money to get those extra shares. It is this potential imbalance that puts them at great risk. You said: "The increased activity in shorting you note on the level II in the 4's (if indeed the interpretation is correct) means that some people with deep pockets think that the stock will indeed go lower and the spiral continue. Of course, Berg standing in the breach and buying those shorted blocks indicates that there is a battle galore between the bulls and the bears." I repeat, whoever is the seller is not going to cover their shorts if the only ones selling now are the shorts themselves. This appears to be the case. And to the extent that Berg and others are sopping up all the shorts presented to them, it will be that much harder for the short positions to be closed at prices below the $6-7 range. I'll go so far as to say darn near impossible. Now, I'll repeat another possibility I posted about before: The increase in short position all spring, when the stock was in its 'rolling' trading range, was most curious. If CC or others continued to short at the high end of the trading range, and cover at the low end, why did the net short position increase? Were they simply unable to cover as many as they shorted before the stock worked its way to the upper end of the range? (Call this scenario one.) Or did they cover their entire short position when the stock reached the lower end of the range, but choose to keep the long shares without closing their short position? (Call this scenario two.) Then consider this summer, when the stock was pushed down from the ask without a proportional increase in the short position. The tape action indicated most of the selling was manipulation from the ask (big blocks to the bid were in 90% of the cases matched in time with sales from the ask; often this occured when the bid was placed on a downtick and could not be directly shorted to, hence this would be another way for the short MM to 'feed' the players who needed shares to throw at the bid to take it out, and allow the ask to walk down another 1/16 or 1/8). Hence one would have expected to see a greater increase in the short position each month. (OT a large seller wanting to exit his position could have done so without forcing the ask down. We often observed the ask taking hits of many tens of thousands of shares, even in 'non-manipulative' situations, without allowing it to rise, and this is not normal MM behavior.) Since we also did not see the short MMs collecting nearly as many shares from the bid side, we knew we should have been seeing an increase in the total short position. We did not. Well, then 'scenario one' is unlikely to have occurred earlier, because there was no stockpile of long shares the short MM could have worked with this summer. Hence it seems that 'scenario two' is a strong possibility. Under scenario two, the TRUER situation is that the NET short position DID NOT increase this spring to the degree that the reported short interest indicated! The short position was to some degree covered by a large stockpile of long shares. Then this summer, it was these long shares that could often have been used to sell into the market from the ask or directly to the bid. And in this scenario, the 'reported' short position would barely have increased at all, even though the TRUTH is that the NET short position was ACTUALLY INCREASING every day. Just another possibility for discussion. (See what a little 'data mining' can do?)