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Technology Stocks : Cymer (CYMI) -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (18673)	7/23/1998 1:03:00 AM
From: Curlton Latts	Read Replies (1) \| Respond to of 25960

Zeev your analysis doesn't hold water for a couple of reasons. # 1. Your statement that >>>"When he shorts, he does not have to put up like you and I 50% cash against the short, he actually get the whole sales price in cash.<<<< Au contraire mon ami. Using your logic someone can put up NO CASH, only a $500 MM cnvt. deb. and not only short $500 MM worth of stock - BUT - also get another $500 MM of free cash flow to short another $1.0 Billion worth of stock to boot assuming a 50% margin. A total of $1.5 Billion short using only a $500 MM cnvt. deb. to start. Least we also not forget - following your logic further - he should also be receiving some additional free cash from the short sale of the additional $1.0 billion ad nauseum to the point where he then is total ruler of all the wealth in Christiandom. I don't think this kind of soft thinking would ever pass muster with even the most creative investment banker or brokerage and that doesn't even take into consideration that this $500 MM conv. deb. has a risk profile with its floating market price (currently way under water). Of course I imagine the type of brokerage you envision wouldn't mind that the convert was only worth $350 MM against a $1.5 billion short. When you're willing to take that kind of risk, hey what the heck is risk - just tell me my yield. # 2. Notwithstanding that the money multiplier effect you describe doesn't work this way in the real world, the cnvt. deb holders never got the chance to come close to shorting the full issue at the $47 strike negating the need to even debate point # 1 above. Let's look at the one or two week window which was the only time ever that the stock price was at or above $47. You will note that it was in the last week of August 1997 but by Sept. 5 the window was way gone by a minimum $15 (not an insignificant discrepancy when your trying to multiply $500 MM into $1,500 MM). techstocks.com Now let's look at the actual numbers of short interest during this period. (P.S.: It gets fun here because I get to talk about Mr. Master Of The Universe Knucklehead Smith 4 Million Shares Short In 60 Days Regardless Of Price Man - admittedly a sore subject in certain quarters). viwes.com You will note that it couldn't have happened anywhere near the $47 strike. Probably closer to an average $25-$27 and clearly at risk for wipe out losses on the way up to $47. It is interesting to note that there was a huge squeeze runup between August 15 and September 15 as it was right then that CYMI reported blowout earnings. My suspicion is that Mr. Master Of The Universe Knucklehead Smith 4 Million Shares Short In 60 Days Regardless Of Price Man participated on the buying side during that runup to draw in retail investors and build a line of shares to start the big selling campaign. A good stock operator always starts his operations going the opposite direction from his intentions in an advertising fashion. So you see Zeev it really doesn't matter whether we can create a synthetic never ending well of cash from nothing. It is a known given that the actual facts pertaining to CYMI's specific case do not support that hypothesis. _________________________________________ Now having gone through all of that analytical examination I think that everyone would have to admit clearly that the huge exposed risky short interest position in CYMI would prefer to cover at $24 than at $42, given their druthers. Good Luck To Each And All Curly ~~~~~~~~^^ [6.6] ......> [_