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

To: Chisy who wrote (16401)	11/26/1999 1:39:00 PM
From: Rich Wolf	Read Replies (2) \| Respond to of 27311

Short interest as of Nov. 10 trades: 1,580,034 shares, down from 2,833,553 shares the previous month, a decrease of 1,253,519 shares. This is less than the 1.56M shares that Castle Creek recently acquired: the 1.335M shares Castle Creek received for conversion of the series A preferred and the 226k shares they received for the conversion of another $1M of the series B on Nov.3 (as per the latest 10Q filing). It would appear that prior to our runup last week after the conference call, there was a substantial outstanding short position that was unhedged. I wouldn't be surprised to see another gap up in the share price when we get another PO announcement. Our best reasoning is that the heavy selling at $6 on Thursday and Friday (Nov. 11 and 12), after the conference call and PO announcement, came from Castle Creek. Additional selling in the low 8's on Monday and Tuesday the following week (Nov. 15 and 16) also appeared to come from them. Our tallies put them at having completely hedged the remainder of the series B preferred shares, and possibly even having sold short against some of the warrants (priced at $6.75, when exercised). Since CC 'gave away' the remaining B shares at much lower prices than they could have received by just letting the stock run, this clearly indicates they are thick as thieves with the organized short coalition, and likely had standing agreements to assist the other naked shorts in covering at the fixed conversion price. Unfortunately for CC, the stock went up rather than down after the call, and they missed their window of opportunity to actually convert the rest of the B shares below the fixed conversion price of $6.03. At this point, they will just leave those unconverted as 'insurance,' but this will become more and more irrelevant as the company moves forward into production. CC need not be in a hurry to convert and cover, since they have no capital tied up and actually get 6% more shares per year for not converting. The combined short coalition was only able to short the stock with impunity this summer because they had the B series as a hedge, and now those appear to be spent. Any shorting (apart from the warrants) from this point forward would be a naked short position. We may even have seen a little of that from retail players above 10 lately, but that's a losing gambit (IMHO). Further, for CC to short below the price of the warrants would be financially suicidal, so for all intents and purposes the 'death spiral' scenario is completely dead as well. In summary, there's still a sizeable naked short position out there, unconnected with Castle Creek. More fuel for the fire as the stock moves up over the next few months. Happy Holidays to all

To: Chisy who wrote (16401)	11/26/1999 1:40:00 PM
From: Pallisard	Respond to of 27311

Something strange is happening with the reported volume. Earlier it was nearly 200,000. Now all my services are reporting 42,700. Looking at the action and taking into account the semi-holiday, I believe the lower number.