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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 (10360)	6/20/1998 12:44:00 PM
From: White Shoes	Read Replies (1) \| Respond to of 18691

Re AENG, well, I'll see what my broker says. As for it still being in the pump phase a look at the chart gives me a pretty good feeling that the one week spike above $25 was the top. It was a "ZITL top"...same chart pattern...looks a bit like RACE too with similar price levels at each phase. The current market seems to be precipitating the collapse of the outright frauds. IMO you can't wait as long as you once did. By the way is there a Yahoo! thread for it or was it removed?

To: Roger A. Babb who wrote (10360)	6/20/1998 9:21:00 PM
From: Fernando Saldanha	Read Replies (1) \| Respond to of 18691

There is an interesting article in the latest issue of Forbes. The title is "Pact with the Devil," and it is about Hayes, the modem maker. Hayes issued a $45 million 6% preferred convertible, with conversion at a 15% discount. At the time the stock was trading at a split-adjusted $17. The issue was bought by hedge funds, who immediately shorted the stock. Other "speculators" also shorted, and Hayes's stock collapsed to $3.50. Hayes has stopped honoring the conversion clause and is suing the hedge funds. He has settled with seven of them, settling the conversion price at $9. This, despite the fact that the contract explicitly allowed for short selling the stock. Zitel has also entered a "pact with the devil," with similar consequences. It would be worthwhile to have a list of companies that have issued convertibles with conversion at a discount. The potential for dilution is practically unbounded, and only a desperate management would sign such a deal. Hence, such stocks should be excellent candidates for shorting.