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Gold/Mining/Energy : Nuvo Research Inc -- Ignore unavailable to you. Want to Upgrade?

To: Mark Bartlett who wrote (12005)	1/25/2003 5:54:58 PM
From: wilyolvet	Read Replies (5) \| Respond to of 14101

exercise your rights everyone has to decide whether to exercise their rights or not....imo, everyone should exercise their rights even if they can't afford further investment or even if they feel uncertain about the future of dmx....the reasoning behind everyone exercising is two fold the first reason is because if you are not going to exercise, you might as well take advantage of the small windfall to help offset the inevitable dilution...exercising even if you don't want further investment simply involves selling enough shares to cover the cost of buying the new shares at $2 (you will pay a commission on the sale but there won't be any commission for exercising your rights) ....the second reason for exercising is that even if you don't want to exercise, the company will be stronger with more cash in the till and we won't see the constant selling pressure that we have seen from acqua....you will see selling pressure as people always need money or will change investment strategies, but the pressure will not be constant which means the share price will have its first opportunity in a very long time to find its natural equilibrium so, if everyone is going to exercise their rights, but some don't intend on investing more money, the obvious question is when should you sell shares to provide funding to exercise your rights???? contrary to what has been posted by others whom i respect, i don't think everyone should wait until the last minute (let me preface that comment by saying that if you don't plan additional investment but want to take advantage of the windfall from the rights, you can wait to the last minute to exercise, but you may want to look at selling off enough shares above $2 in order to exercise at $2)...while waiting to the last minute could prove to be more profitable than selling early, it could also result in you not winning at all the rights game has many similarities to the option game but the rights have a very short life (most likely 21 days) options become less and less valuable as the expiry date approaches until they trade at the intrinsic value (versus a premium for time) on the day of expiry so what happens is that everyone who doesn't plan on making an additional investment will all be heading for the exit at the same time unless they plan ahead (ever go to a leafs or raptors game...those leaving a little early get out of the parking lot in thirty seconds and those waiting until the game is over have to wait for half an hour)...the result will be that the value of the rights will be pushed down closer to the intrinsic value as the expiry date approaches...this is exactly like the option game but the fuse is really short on rights offerings if you firmly believe that dmx will pop a nr before the expiry date, you should hang on to the rights until the news release...but there are risks involved...given dmx's track record on timing, counting on them to meet a deadline is risky...there is also the uncertainty of timing from any regulatory authority...there is also the possibility of an ulterior motive in not having an announcement until after the rights have expired (i'm not suggesting this but the financial windfall available to those in the know that approvals are coming but not before the expiry of the rights is mind boggling as the windfall could easily be in the tens of millions of dollars and perhaps even more than one hundred million depending upon how many shares are scooped up and how good the news is...i'm not trying to stir up trouble, but i have always found that money - or should i say huge money - has a funny way of dictating events....researching the track record of companies during and following rights issues makes for a very interesting study) the bottom line...will they announce something of significance or not and what will the share price do either way? i would suggest that none of us know if they will announce something for sure - if you do know, please contact me :) if they don't announce anything, i would expect the share price to move back down to the strike price of $2 making the rights essentially worthless if they do announce something, i would expect a spike in the price immediately, but i would then expect to see the share price begin to filter back down very quickly (unless the announcement is fda and then we can all party all night long)...the reason that i expect that the share price would begin to fall quickly is that everything is accelerated during a rights offering....remember, everyone that is not investing more money will be heading for the exit at the same time unless they have the cash available to put in their brokerage account well in advance of the expiry (a warning here for last minute shoppers, the brokerage houses will likely be working on a cash basis on the expiry date rather than on a three day settlement so don't wait until the last minute) so what is my point???....think twice about waiting to the last minute....my guess is that the price could appreciate from current levels if people believe that an announcement is definitely coming, but the price is unlikely to move much more because the clock is against us....i would warn that there will likely be rumors galore as the incentive to cause a short term spike or a short term dip in price is quite high due to the timing issue what is my strategy???...i chose to sell immediately at the opening on monday...i sold enough at $2.50 to buy back all of my shares via the rights offering at $2...as such, i locked in my 20% profit immediately to offset the 20% dilution that i would be facing...any further investment decision on my part will be made based upon my opinion of the prospects of the company....this post (like my previous post on the different scenarios during a rights offering) is entirely informational in nature as i don't think this is the time or the place for pumping or bashing...besides, i sincerely doubt that anyone cares what i think anyway btw...i would like to apologize to those that have sent me messages...i don't use SI very often and i inadvertently erased the messages before getting a chance to respond i hope the above helps...if not, don't shoot me, i'm only the messenger wily