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Technology Stocks : America On-Line: will it survive ...? -- Ignore unavailable to you. Want to Upgrade?

To: IKM who wrote (5778)	11/11/1997 5:27:00 PM
From: LightPen	Read Replies (2) \| Respond to of 13594

To All: This is a great thread Thanks for all the informed discussion. I was confident shorting this stock as a result. I didn't think it would be this easy though. Looking forward to $67 tomorrow.

To: IKM who wrote (5778)	11/11/1997 7:52:00 PM
From: Steve Robinett	Read Replies (1) \| Respond to of 13594

IKM, Your explanation of converts is quite good--AOL using their high equity price to get cheap debt money. I used to mess around with discounted converts a lot when the market was lower. It's hard to find good ones after the last few years of upside. Typically, companies add the convert feature as a sweetener when ordinary debt is too expensive. They also typically do it near highs. As you point out, the high stock price after a runup gives people who buy the debt a feeling they will participate in the equity as it goes ever higher, which it seldom does. As for dilution, AOL has enough shares outstanding that the converts probably won't have much effect--I haven't seen the terms yet; really bad companies occasionally have variable conversion ratios, probably not the case here. Anyway, I almost always read converts as near the end of the line for the equity price. I think I should have held the 85 puts I sold yesterday. Best, Steve