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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Roger A. Babb who wrote (7857)	4/25/1998 10:31:00 PM
From: Bald Man from Mars	Read Replies (1) \| Respond to of 18691

<<BM, A day does not a year make. I have bailed from a number of short positions with losses in this Bull Market. We had a couple of days last week that were "free money" for shorting the crazy run ups. Don't get those very often.>> If you still have deniro to short for another day, it is cause enough to celebrate. Giving that you did so well last week, are you sipping your expensive champagne or are you still downing your cheap beer ???

To: Roger A. Babb who wrote (7857)	4/25/1998 11:04:00 PM
From: Gokhan Gezmisoglu	Read Replies (3) \| Respond to of 18691

I have couple questions about the mechanics of shorting. Say company A has 100 shares outstanding. I have 10 of them, I keep my shares in a margin account. My brokerage house (say Datek) has another customer(say Mr. Short) who wants to short those shares. Datek lends my shares to Jim who sells those shares in the open market to Mr Bull. Now I will itemize my thoughts, questions it is easy to respond; 1) Company A has now a float of 110 shares so the liquidity has increased actually. Right or wrong? 2) Company A has a good year and no use for cash so they declare $1 dividend. On the Distribution date, Company pays out $100. Now we have 110 shares out there and only $100 to be shared. Mr Short ends up paying $10 to Mr Bull for the dividends. Right or wrong? 3) Mr Bull does not know (and does not have to know) that he had been paid by Mr Short. As far as he is concerned, he was paid by Company A. Right or wrong? 4) Company A has to decide on a matter and needs a shareholder vote. Do I have 10 shares worth of votes? Does Mr Bull have 10 shares worth of vote? Who gets to vote? Now we know that I was keeping my shares in a margin account (and not in a cash account so they were lent out) Did I lose my right to vote when I decided to keep my shares in a margin account? 5) Assuming I lost my rights to vote when I decided to keep my shares in a margin account, did Mr Bull also loses his right to vote when he keeps his shares in a margin account? What if his shares are in a margin account and they are not lent to a short seller yet? He has the right to vote because he was lucky or as soon as you put your shares in a margin account, do you lose your right to vote? 6) I decide to move my shares in a cash account so Datek needs to supply me my 10 shares. Datek has another customer who is 10 shares long in a margin account (can be even Mr Bull), they get those shares and give them to me. Right or wrong? 7) Say Datek does not have another customer who is long in margin account. Can they go to E*Trade and ask for 10 shares or do they have to ask Mr. Short to supply the 10 shares he is short? I have some other questions but I need to know the answers to the above first. I am asking the questions to Roger but I will appreciate any input if you guys/gals have time. thanks, Gokhan