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Technology Stocks : 3Com Corporation (COMS) -- Ignore unavailable to you. Want to Upgrade?

To: Tim McGee who wrote (43987)	7/16/2000 10:58:39 AM
From: kcmike	Read Replies (2) \| Respond to of 45548

For those margined heavily on COMS: I see a potential for selling pressure on PALM not related to the increased float. COMS has a low maintenance margin requirement (say 35%) at most brokerages I deal with. PALM has a high margin requirement (say 70%) at some brokerages. Wouldn't this create possible selling pressure on PALM post-distro even if it rises considerably? For example: Let's say you currently own 100,000 worth of COMS that you bought with 50,000. Your equity is 50%, but you feel pretty safe that it won't drop below 35% and create a margin call. Post-Distribution, for simplicities sake, let's say that is now $82,000 worth of PALM and $18,000 worth of COMS. The maintenance requirements are now: COMS: 18,000 * .35 = $ 6,300 PALM: 82,000 * .70 = $57,400 TOTAL: = $63,700 Now all of a sudden you a fairly sizable margin call. Is this a possible scenario, or is my logic flawed entirely possible)? Thanks, kcmike