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Strategies & Market Trends : Shorting stocks: Broken stocks - Analysis -- Ignore unavailable to you. Want to Upgrade?

To: drakes353 who wrote (906)	3/2/1998 4:09:00 PM
From: Carl Yee	Read Replies (1) \| Respond to of 2506

Looks like the MM playing games on this one. It was traded at 4 13/16, just before closing and was down 9/16. Then it bounces up to down only 3/16 and at 5 3/16.Someone must have churned a last trade to keep the close over 5? Carl

To: drakes353 who wrote (906)	3/3/1998 3:58:00 AM
From: Q.	Read Replies (2) \| Respond to of 2506

Drakes, re. EA, let's put two pieces of the puzzle together: high volume and downward price action on the chart since mid February, and an S-3/a for discounted converts was filed in January 9. Typically it takes a few weeks after the last S-3/a for the SEC to deem the registration effective. I'd guess that the first of the discounted convert deals started flipping in mid February. Standing in the on-deck circle ready to sell are about 2.7 M shares = $13 M = 45% of float. This isn't going to be absorbed easily. The volume is up a lot, at about 300 k, so the 2.7 M shares represent only about 10 days of volume now. So we do have to pay attention to the calendar. So when to cover? I think I would base my decision primarily on time and volume, and secondarily on valuation, and not on share price. Timing the deal: What makes discounted converts so attractive is that you know, in advance, that there will be a certain amount of institutional selling, and because of the dates of the filings, you know roughly when it will start. I want to take maximum advantage of this. But I don't want to wait too long, till after the selling is done, which I did with PNDA last year. I want to try to guess when the offshore selling might be done. It's surely going to take at least 20 trading days, or a month, for the first deal to clear out. Looking at the chart, I would speculate the selling began around Valentine's Day. So I think I'll try to sit tight at least until the Ides of March for the first deal to be all in the float. Whether I sit pat and wait for the second deal might depend on the valuation, which I base on PSR compared to the industry leaders. Who knows, Drakes, you might be right about it hitting the low 2's. Based on comparative valuation of PSR with industry leaders, I would say I wouldn't want to stay short much below that point.