Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Floorless Preferred Stock/Debenture -- Ignore unavailable to you. Want to Upgrade?

To: Neil Stewart who wrote (96)	10/5/1998 10:14:00 AM
From: Mama Bear	Respond to of 1438

"Inasmuch as IDBEF's convert is fully redeemable by the company for cash at any time, it removes the possibility of "going short" without risk I believe every one of these deals I've looked at has the buy back option. ALTIF recently did exercise that to buy back what remained of their floorless convert. I understand it is a rare occurrence. The people that issue this type of financing have in some way dealt with this remote risk. "I submit that the greater profit potential for this investor exists if the stock appreciates." For the stock to appreciate, the company would have to be doing well. If the company is doing well, they will likely have the money to buy back the convertible. You are arguing against yourself. "I'd also point out that this is not an issue that would be easy to "short" in size and, at its current price, not the most attractive "short prospect" in the universe." I think the easy to short in size has been addressed. Don't be fooled by the absolute price issue either. Again, you are trying to get me to argue specifics about IDBEF, I have told you that I can't find the SEC filing for the convert. As a matter of fact, there are only two filings on Edgar for the company. An SC-13G and an SC-13G/a from 2/13 and 2/14/98 are all that's there. No 10-Q's or K's, no S-3's, nothing. That in and of itself raises some giant red flags with me. " Although this security has some inherent, potential disadvantages, on balance, they are outweighed by the potential benefits given the company's near-term prospects. Again, I submit that if the company's near term prospects were that strong they would not have to go to the equivalent of a loan shark to raise capital. There would be money available on less onerous terms. Since there is no other specifics I can address concerning IDBEF, and since I know that once someone decides to defend a company like it they will excuse almost any behavior on the company's part, and since I have no monetary interest in IDBEF, this will be my last post concerning this company. I am sure that you will find a business or two that are successful ongoing concerns where the owner got his financing from a loan shark, but you will probably also find they are stark exceptions, and not the rule. Barb