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Technology Stocks : The New QLogic (ANCR) -- Ignore unavailable to you. Want to Upgrade?

To: Ken Richard who wrote (18376)	10/4/1998 7:21:00 PM
From: Eleder2020	Read Replies (1) \| Respond to of 29386

>>>btw, what is the current short interest ?<<< George and Ken- After thinking about it the short interest may not really be of much significance except to help us understand in a remedial way how far we get into the Reg D conversion. I'm going under the assumption that all of the shorting is being done against the box as it is difficult to short a stock under $5, so let's assume that for argument sake. If that is the case every short from the Reg D holders now involves a buy and a sell or a $0 sum trade.So covering either happens by covering your short by selling your long or selling your long and covering your short with delivery of newly converted stock which bring you to $0 again with the only item of value either way is your newly converted stock which you got from the financing agreement and the only way to make money on it is to short(sell) or sell the converted shares. My point being is that short covering in this scenario really doesn't help us longs except from the shorters who have to cover, who haven't shorted against the box which may or may not be a substantial amount(my guess would be not substantial as a total of the shorts listed). The reason: covering the short involves a buy and a sell for the Reg D guys a $0 sum transaction. The number we should be looking at is the number of shares that the REG Ders are converting to understand the final dilution which Kerry believes will be in the 21 Million range. Again my premise is based on facts that aren't proven, which is the majority of shares are being short against the box by the Reg D'ers. Ed

To: Ken Richard who wrote (18376)	10/4/1998 10:28:00 PM
From: Greg Hull	Read Replies (1) \| Respond to of 29386

Ken, <<There HAS to be risk with this strategy .. What if the stock starts moving on major news, would the squeeze issues not come into play. Also, there is a time (as in our case) that the preferred's are through.>> I don't see how the preferred holders can be squeezed. You or I would be squeezed if the price rose above the price at which we sold short. We would be forced to buy new shares at an unattractive price. They buy new shares (that is, convert) at prices of as long ago as three weeks. There is no risk in the price getting further away. They know the price they can convert at today, and for the next three weeks (at least the worst case price). I still maintain that the best circumstance for the preferred shareholders is a sawtooth price chart - quick jumps from the low $1s to $2 or $3, followed by a return (probably slow) to the low $1s again. This cycle would be repeated as many times as it took to sell all the shares they wished at 100% or better profit. They would not convert the shares until they had locked in the selling price. They can sell today, convert tomorrow, at yesterday's price. It's hard to squeeze somebody who isn't forced to buy at today's price. Greg