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Technology Stocks : Blank Check IPOs (SPACS) -- Ignore unavailable to you. Want to Upgrade?

To: Carl Worth who wrote (630)	9/26/2006 8:45:06 PM
From: RockyBalboa	Respond to of 3862

If the whole scenario was really bearish (which is not quite) then this would call for a "Texas Hedge" ie: short both much similar to the case when one weak company bought another like PFSW bought ECST and both fell into oblivition. Why? Well, the Jazz Semiconductor company found that the IPO door is closed and the public finally discovers that it is not worth very much. CNXT suffers so does RFMD as perhaps high hopes were priced in both but their sub goes to a public shell as a whole, perhaps at a small price (as you say they just get their money back instead of landing a 5x bagger). From all the shells we see here there are only a few with an aquisition target and the few completed aquisitions did not really perform to well in the market. So this points to the idea that the shells can purchase only a subset of companies which are too small or to weak to do an IPO. As a result shells may fact adverse selection problems. Thats when the Texas Hedge comes into play. Well, the other more bullish scenario for the shell (not for CNXT) might be that there is only a fraction of stock in the float, so the incentive is high to raise the stock price at least until new insiders sell some stock. I would not rule out such a scenario if the market does well in Winter and the new year.