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Biotech / Medical : Ligand (LGND) Breakout! -- Ignore unavailable to you. Want to Upgrade?

To: Russian Bear who wrote (14179)	2/3/1998 10:34:00 PM
From: Henry Niman	Respond to of 32384

RB, I asked LGND about exercised LGNDW as well as the 1.5 million share day. Very little LGNDW has been exercised. It appears that the 500K blocks earlier involved swapping between parties other than Farallon. My take on the situation is fairly straight forward. Farallon started with 1.7 million LGND, 3.4 million LGNDW and 3.4 million shorted LGND (right after LGND bought back ALRI). When they received the 1.7 million from LGND they turned that over to the third party involved in the short, reducing their short position to 1.7 million and their long position to 3.4 million LGNDW. They may have sold some LGNDW, but still have over 3 million LGNDW. They plan on selling the LGNDW down to 1.7 million, which they will exercise to cover their remaining short position. Today they tried to sell the 112.5K block. The MMs took it at 5 (I suspect that many of the earlier trades in the day were buys at 5 1/2). The drop in price will bring out buyers and Farallon will continue to unload at the deflated price. It's a bargain for buyers (time premium less than 1) and they will gobble up Farallon's LGNDW. Farallon will then convert 1.7 million LGNDW and cover and put their profits into another arbitrage position. At that point the artificial depression on LGNDW and LGND will evaporate, and most of the posters on this board will be very happy.