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

To: Larry Brubaker who wrote (14876)	9/28/1999 1:40:00 AM
From: Rich Wolf	Read Replies (1) \| Respond to of 27311

Larry, part of the answer to your question is that when CC first entered into the agreement with Valence to fund them at $6 per share, the stock was around $5 per share (July 1998). Yet the variable conversion on that first tranche was 6 months away, and in the interim the only conversion available was $6 per share. So CC was at risk when they first bought the preferred shares at a price actually above the price the stock was trading. So yes, they surely must have performed DD prior to investing their money. In fact, the stock did not rise above the $6 conversion threshold until November, and by then the short position was over 800,000 shares. It is doubtful that CC shorted until November, when they could first do so at prices above what they'd funded the company with. This raises another topic, since then if CC did eventually short against the entire first tranche ($1.3M incl. interest, by this summer), they did not complete hedging their position until the total short interest was at 800k + 1.3M, or 2.1M shares. That did not occur until this May. So no, CC was not always able to be completely hedged. Now that they are in a position to remain completely hedged, it seems they prefer to do that. And given that the SEC filings showed them to be beneficial owners of over 4.9% of the outstanding common, many of us expected them to have to file with the SEC if they ever did short. Since they did not file, our best conclusion was that they had not sold short. This was based on legal interpretations of the documents, and the intent of the SEC regulations regarding reporting of changes in beneficial ownership. Now that we have 'heard' from company officials that CC reports they DID short in the late fall, and eventually had shorted against the entire first tranche, and yet they had not filed with the SEC, then we must accept that CC chose to interpret the loophole in the SEC filings as being sufficient to not require them to report changes in beneficial ownership. As a consequence, many of us have had to adjust our interpretation of the trading patterns over the last year. Interesting that this piece of secondhand information from within the company (regarding CC shorting) is somehow acceptable to you to be treated as 'fact,' yet other information reported by company officers, even over public conference calls, is not only ignored by you, but rejected and even ridiculed (by your friend 'noway' on yahoo). If you're looking for something to call 'inconsistent,' look no further than your own posts. Conversely, what Paul and many other longs have done is reviewed their models of the world whenever new data became available, and made modifications when necessary, which is what any good scientist or investor should do. Rich PS The history of the short position also indicates at least 800k naked shorts from last fall, and more since then. Although the tape action this last month shows increasingly more short covering.