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Technology Stocks : Osicom(FIBR) -- Ignore unavailable to you. Want to Upgrade?

To: CMS27 who wrote (6650)	5/1/1998 3:55:00 PM
From: Bryon Bothun	Respond to of 10479

>> How does the fact that due to the price drop the shares converted and gave them more shares at a lower price figure into this equation?<< Actually this is rather like the effect of a stock split. At the moment you convert the value is exactly the same whether you get 1000 shares at 5 or 2000 shares at 2.5. In either case you only make money if the shares go up. There would be no reason for you to drive down the price just to get more shares of a soon-to-be-bankrupt company. The fact that you are trying to drive down the price to improve your conversion percentages is actually a rather bullish statement on the long term prospects of the company. I suppose if you were expecting to get 100,000 shares and shorted right away if the price went down and you got 200,000 shares then you could cover with half and keep half. I guess that might turn you back into a long again. I'm not sure if it is the case with these shares but frequently restricted shares cannot vote so some of these shareholders may not have had a voice in the authorized increase, although I think they would have supported it since there might not have been enough shares for them all to convert without the increase. "Shorting the box" only means that you are long and short the same number of shares of the same issue, it has nothing to do with the prices at the time the positions were entered. Except for situations like this were people own restricted stock it really is mostly just used as a tax dodge. Usually its a way to lock in gains while deferring taxes for a full year but when I was a broker I had a client who would always short to lock in a LOSS if he was over $3,000 in total losses for the year and wanted to use it for the next year. Bryon