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Strategies & Market Trends : From the Trading Desk -- Ignore unavailable to you. Want to Upgrade?

To: Baudwalker who wrote (3314)	6/23/1998 9:56:00 AM
From: Spots	Read Replies (1) \| Respond to of 4969

Regarding #reply-4520660 and related posts. Interesting post, but what's the source? I wonder. Here's a part I question: >>There are many ways a public company can confirm an undeclared short position in their stock. One way is to use the response to the company's annual general meeting. The company can add the issued stock (IS) and the short interest (SI). The sum is the stock available in the company's market. Now add the known shareholder positions (KS) and the street stock proxies (SP) If the (KS+SP) sum is greater than the (IS+SI) sum, you have an undeclared position in your stock. Does the company really expect to be able to see IS plus SI proxies come in? (I mean in the extreme case that every share gets voted; I realize it's hypothetical.) If so the number of valid (possible) stockholder votes cast is governed by the (legal) short interest (SI). That is, if known shareholders (KS), i.e., registered in a non-street name, plus street stock proxies (SP) is greater than issued shares alone (greater than IS alone, NOT greater than IS + SI) then there are more votes being cast than issued shares. I do not know the mechanism for accounting for shorts and proxies. However, ultimately the total vote can't exceed issued shares (IS). Therefore, either the company arbitrates among street proxies when KS+SP exceeds IS, which I seriously doubt, or it is the responsibility of the broker or other street account issuer to issue exactly that number of proxies that it carries in actual registered shares on its books, which makes sense. How the broker divides those proxies among margin accounts holding long positions is another issue. But however that's done, I don't believe a broker can legally issue more proxies than ACTUAL shares it has registered with the company on the corporate books, though it will have its own internal long (margin) shareholders equal to its (margin) corporate-registered street shares plus short interest. This raises serious questions in my mind as to the authority of the entire piece. Of course I don't have any direct authority for my statements above either <G>, other than sweet reason, which certainly doesn't always prevail. Nevertheless, I'd have to be shown that corporations arbitrate (potentially) among street proxies inflated by short interest, ESPECIALLY after the votes are marked and sent in <G> (lessee here, another NAY to reelecting the board -- out it goes!). It makes much more sense that brokers arbitrate among long margin accounts BEFORE the vote somehow. I would like to know the mechanism. Regards, Spots