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Non-Tech : Any Stock Warrants -- Ignore unavailable to you. Want to Upgrade?

To: John F. Poteraske who wrote (102)	11/26/1997 1:45:00 PM
From: Richard Babusek	Read Replies (1) \| Respond to of 1916

In case it's not obvious, I'm an owner of BNGO both equity and warrants. I believe in buying quality (fundamentals) but at the right time (TA). I was first drawn to BNGO by how management reacted to a huge setback in Florida. They didn't change their game plan and if you isolated the operations they were on track, but with a financial setback that tanked the share & warrant prices. I started accumulating shares at 1.375 through 5.00. Some profit was taken off the table several times and a portion of those funds were used to buy warrants, to get the leverage, and to control more shares. I was looking at year ending '98 at maybee >$20 (still not completely un-likely). What I did not forsee was the sudden tanking the prices would take with the warrant call notice. These posts of mine are intended to share what I feel happened, try to understand the mechanics of the situation, and to elicit more knowledgable responses than I can give. I believe one theme that is re-stated over & over is much too simplistic to explain what happens is the "warrant dilution" issue. I've covered that in my previous post & on the Bingo thread. The market cap & liquidity issue along with arbitrage positions is where I think the problem lies, but I can't abstract it to my own satisfaction. I know I wished I could have shorted my position in the face of uncertainty, and would have been much richer today, with cash to convert my options or buy cheap now. For example a stock @ $8 with 5M shares=market cap of $40M, if a warrant call doubles the no. of shares, to remain at $8=market cap of $80M. Now just where is the $40,000,000 going to come from? If new blood, (er money) isn't available giant selling pressure occurs. For example in my own case, I own more w's than I can afford to convert, so I was planning on selling some of my w's or s's to raise the dough. Well I guess everyone else was doing the same thing, so who's buying? The very short duration of the warrant call period was not good in my opinion. Several liquidity factors exaserbated the situation; 1) Raising the $ in a short vs. long time period causes panic, 2) no posibility of interim 10Q's (showing progress) to bolster price, 3) no marginability (for the average shareholder). Enough for now, Ricardo