To: Ed Ajootian who wrote (3397 ) 8/13/1998 9:39:00 PM From: Zeev Hed Read Replies (5) | Respond to
Ed, your thesis is interesting, but the facts are that no company is allowed to buy more than, I believe, 10% or 20% of the average trading per day (the number is now escaping me, but there is definitely a limit). For the sake of the following argument I will use the higher number. The stock's average trading is 400,000 shares per day, so any trading day they can buy no more than 80,000 shares. To buy the full 5,000,000 shares over the next three months (let say 65 trading days, they have to go in and buy everyday some 80,000 shares, long before they know if the well is a dud or a gusher. Corporations are not supposed to gamble on their own shares. In any event, their buying pressure will indeed keep the price in the range of $3.5 to $4.5/ share, and thus my $20 MM supposition is relatively accurate. Their buying will also provides all the upticks necessary for shorters to lay out the shorts they have not managed to lay out yet.
