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Technology Stocks : TAVA Technologies (TAVA-NASDAQ) -- Ignore unavailable to you. Want to Upgrade?

To: Hawkmoon who wrote (16063)	5/6/1998 10:27:00 AM
From: Karl Drobnic	Read Replies (2) \| Respond to of 31646

Institutional hedging: Suppose you'd bought 200,000 shares of TAVA at $5. At $13, EPS estimates get lowered, and you're sitting on a profit of $1.6 mil. What do you do as a responsible money manager? One possiblity is to short against a portion of your own holdings. You could, for example, short 100,000 shares. You are still well exposed to the upside (your position is +100,000 shares), but you've also reduced your downside risk. If the EPS turns out to be a non-event, you simply take off the hedge position and continue as before. This would be prudent money management by someone who was a long term holder, but worried about a short-term blip, and not much cause for individual long term investors to worry.