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Technology Stocks : Lucent Technologies (LU) -- Ignore unavailable to you. Want to Upgrade?

To: Dave who wrote (18572)	8/4/2001 5:38:59 PM
From: GVTucker	Respond to of 21876

Dave, RE: If Lucent waits a little while before shooting up to 20, there is no loss. Technically no loss since the fund will be able to pocket both the interest on the short and the 8% coupon, correct? Yep. By "position", do you mean that fund will utilize 5:1 or 10:1 leverage in order to purchase the conv't? Yep. This last question is completely unrelated to Lucent, how does a hedge fund find financing to have that type of leverage? A frighteningly large number of banks are eager to stand in line. You would have thought that LTCM would have scared them off, but the funds have managed to sell the banks on the fact that these are arbitrage trades, even though they do indeed have a risk of loss.