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Biotech / Medical : Biotechnology Value Fund, L.P. -- Ignore unavailable to you. Want to Upgrade?

To: Doc Bones who wrote (3520)	6/17/2003 1:34:20 AM
From: tuck	Respond to of 4974

Not really. I can add a few ramblings to what you and Peter say, but they're not worth much. I'm sure it varies according to what the perceived prospects of the company in question are against the risk/reward ratio the investor likes. Sometimes I wonder about collusion between management and buyers, making a gentlemen's agreement in advance -- and not in the 8-K -- to the future resetting of the terms, but I'm probably being paranoid. I have noted that GERN, for example, has a habit of resetting the terms of their converts that favor the buyers of them. And I was a bit shocked that GLFD was buying directly from such folks (so what? what stops them from shorting again? why announce this?). I guess companies feel they need to appease these big money people so that they can continue to have access to capital. That's the charitable view. Regardless, the end result is that the convert buyers win, management gets to stay in the game for an extra couple of years, & the small investor gets screwed. But given conditions, it might be equally likely the small investor might have been screwed by a private equity placement at a huge discount. Did investors and CFOs learn anything from the last three years? From SEPR and others? Apparently they learned something, because CFOs are negotiating better interest rates, thanks to Uncle Al. I wonder if the buyers, stuck with low yield debt if the underlying stock can't get to the conversion price, wouldn't apply more than the usual pressure to reset the terms. Or hedge more than usual. But all I can do is wonder, and watch the short interest, though the later rarely gives much assurance or direction. Cheers, Tuck

To: Doc Bones who wrote (3520)	6/17/2003 3:27:10 AM
From: Mike McFarland	Respond to of 4974

Are these companies expected to pay back the principal on these bonds--or do the hedge funds short sufficiently to protect for that possibility too? It seems strange to me that hedge funds would be investing now--after these companies stocks have run up. But rather this is a way for companies to effectively cash out some of the marketcap, and the hedge fund to make a little profit on what is really a neutral position. At least, that is what it looks like to somebody completely naive about this hedge fund convertible arbitrage stuff. <naive> so naturally I googled around, not knowing much about hedge funds, and read this: But the sort of liquidity that hedge funds provide is "everyday liquidity," not "heroic liquidity." Heroic liquidity requires deep pockets, a long investment horizon, and a willingness to "step up to the plate" during times of pronounced dislocation. But the typical hedge fund is operating on leverage, has a shorter investment horizon, and is trying to generate consistent returns. So hedge funds cannot deliver heroic liquidity, though they can deliver tremendous amounts of everyday liquidity. investmentreview.com Any pointers to Hedge funds 101 appreciated. Interesting stuff. But there must be some risk, somewhere.