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Technology Stocks : Advanced Fibre (AFCI) ** IPO -- Ignore unavailable to you. Want to Upgrade?

To: schlep who wrote (3039)	7/11/2000 12:09:32 PM
From: lml	Respond to of 3299

The answer probably lies in a 10-Q filing. Nevertheless, because the position protects AFCI against a downturn in the value of CSCO stock, the hedged position is likely a based upon short position in CSCO shares that is likely secured by pledged a portion of the shares it owns as collateral for the short position. As I speculate, in the event the value of CSCO shares appreciate, and the value of the short position drops, the securities pledged would be liquidated at market value. This would represent the ceiling on the collar, which I believe was capped at $350MM above market value of CSCO stock at the time the position was initiated. Should the value of CSCO shares depreciate, the value of the short position in the stock is obviously enhanced, and thereby creating a floor in the value of AFCI's holdings. I recall there being a 3-year term on the position. So the collar is not in place for perpetuity.