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Technology Stocks : JDS Uniphase (JDSU) -- Ignore unavailable to you. Want to Upgrade?

To: limtex who wrote (11475)	7/19/2000 7:42:36 PM
From: Wyätt Gwyön	Respond to of 24042

Hey Tex! But what about the poor shorts. I mean when I takeover like this happens don't the arbs go out and short the buyer and buy the target? A true arb is only interested in closing the spread. The spread stood at like 19.5% at Monday of last week's close, and is now (at market close) down under 13%. If they are long one share of SDLI for each 3.8 shares of JDSU they short, then they will be able to cover their JDSU position with their SDLI shares (once converted to 3.8x the number of JDSU shares). All that will be left over is the spread, and that's all the arb wants anyway. So they don't care if the stock goes up or down. (As I understand it--and as long as they are hedged in this manner.) Incidentally, the strong rise in JDSU after hours seems to have widened the spread a bit. We'll see what happens in trading tomorrow--if it gets back down to between 11.75% and 12.75%, then the narrowing trend's still intact, IMHO.