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To: Patrick Slevin who wrote (27745)	11/3/1997 8:36:00 PM
From: Ira Player	Read Replies (1) \| Respond to of 58727

Continuing off topic . I'm not sure what the legalities are but, a few comments: Public corporations are supposed to operate for the long term best interest of the stockholders. The long term best interest is best provided by maintaining a capital structure that provides the best EPS. This capital structure changes as the relationship of stock price to the interest rate on debt changes. While I am not particularly interested in any stocks that operate in the following fashion, liking volatility for the short term gains, I believe long term holders would be very happy with the results: Establish rules for trading in the companies stock, moving between debt (low stock price) and equity (higher stock price) following these simple rules: Rule 1: If the interest per share on borrowed funds is less than 90% of the EPS, perform a stock buy back. (Example: Stock price is $100, Cost of money is 5% [quality company], EPS $5.60. In this example, every share the company buys cost it $5 per year interest, but "frees" $5.60 in earnings. The net of $.60 per share distributed to the other holders. Overall, EPS goes up.) Rule 2: If interest on borrowed funds (or the return on cash investments) is greater than 110% of the EPS, sell stock into the market and reduce borrowing. (Example: Stock price is $100, Cost of money is 5% [quality company], EPS $4.50. In this example, every share the company sells saves $5 per year interest, but "introduces" $4.50" in earnings. The net of $.50 per share distributed to all holders. Overall, EPS goes up.) Rule 3: If the stock is between the 90% and 110% points and the company has funds available to purchase more stock (or borrowing capability), sell puts at the trip point for rule 1. (Example: Stock price is $100, Cost of money is 5% [quality company], EPS $5.00. Sell puts at $90. [90.909090909090 actually <g>] If the stock stays within range or rises, the premium increases EPS. If the price declines, rule 1 would trip anyway and the purchases would have taken place anyway.) As I said, not a company I'm interested in. But it would reduce volatility for those looking for the longer term. Also, some might complain that the company is operating against the investor. This is not true. As long as the intention is clearly stated. It does work to the disadvantage of the speculator, trader, and short players, but not to the investor. Ira