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

To: John O'Neill who wrote (19622)	4/26/1998 1:31:00 AM
From: Steve	Respond to of 32384

Farallon didn't get into the position of long the warrants and short the stock; they ended up in that position. It started when they created a position of long ALRIZ and short LGND. Only now are they long LGNDW and short some LGND. They also are long a bunch of $$$$. For every 1000 ALRIZ, they received 974 shares of LGND, 2000 LGNDW and $7960. The big unknown to the story is how many shares of LGND they shorted to complete the original hedge. Although we can't say for certain, I would venture that they delivered the 974 per thousand to the short and are now short the remainder. I completely agree with Bernie that it is all guesswork, though.

To: John O'Neill who wrote (19622)	4/26/1998 3:55:00 PM
From: WTDEC	Respond to of 32384

JO, I essentially agree with Steve. Farallon started with an arbitrage position. For someone with cash, it would only make sense to buy LGNDW and short LGND (a neutral position on LGND and assumes Ligand survives to the conversion date) if they get all the cash from the LGND sale to reinvest at rates which earn more than the premium (really a financing charge) paid to but LGNDW. Problem is only big boys can get to use the full proceeds from a short sale to make other investments. Regards, W