To: bluejeans who wrote (15487 ) 2/20/1998 1:04:00 PM From: Flagrante Delictu Respond to
bluejeans, What an interesting name! Despite the corpuscular disorder I am currently undergoing as a result of picturing your potential, I will attempt to answer your question of why anyone would unload a block of LGNDW at the bottom of a move from around 13 to 5. Bottoms are frequently formed when market makers take from a concerned seller the block of shares that "clean up" the entire balance of what he has to sell. Naturally, they punish him for providing this service to him. Why did he need or desire this particular service? That's where it gets tricky. Although the possibilities are endless, the usual culprits in no order of importance are: margin calls, the holder can't put up enough collateral to meet a margin call & his broker sells him out; in this instance, the possibility of an upcoming margin call; {The stock was declining faster than the bio group as a whole at the time & the holder might have feared a margin call if the warrants closed below $5.00, a price below which some brokerages don't permit margining}; PANIC. This is what motivates most sellers at a bottom ; the "it's not my problem" reason. In this case, someone other than the original purchaser hurls the block on the market, e.g. a new fund manager dumps his predecessors' position, or an executor does , or a margin clerk, etc. Most reasons for selling blocks at bottoms are caused by fear, ignorance, or lack of concern for the consequences of the act. Bernie. P.S.It didn't have to be a group who sold or bought it. There are individuals who hold larger pieces of the warrants than that amount sold at the bottom.
