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

To: Ken Richard who wrote (18454)	10/10/1998 1:01:00 AM
From: Eleder2020	Respond to of 29386

>>>If the stock starts running, the stock must be covered at some point, no? Are you suggesting that if they (or anyone) shorts at 1.25, and the shock gaps to 2+, there is still no req'mt to cover ?<<< "IF" they shorted the box there is no requirement to cover. However when they croak more likely then not, there estate will cover the short by selling the long or just use the long position to close out the short. Think of it for every converted shares that is shorted you have 2 SELLS & 1 BUY. After the original short and the money is pocketed, the short and long really ammount to $0 and have no effect of the stock after the original sell, which does have an effect on the stock. Ed

To: Ken Richard who wrote (18454)	10/10/1998 1:01:00 AM
From: George Dawson	Read Replies (2) \| Respond to of 29386

Ken, Good pick up on the Sec 144 sale. Unfortunately, the amount of stock sold here (179,000 shares) is trivial to the total amount owned. In the last form S-3 filed the Tailwind Fund owned 30 shares of the Series B, 173 shares of the Series C, and 692,604 shares of common. The number of shares of common stock registered by the company on behalf of the selling shareholders according to Table 1. was 3,370,380 shares (438856 Series B + 2,931,524 Series C). The killer of course - is the footnote to these columns from the same table. Please note this is the exact wording from the S-3: "Because the number of shares that will ultimately be issued upon conversion of the Series B and Series C Preferred Stock is dependent, subject to certain limitations, upon the average of certain closing bid prices of Common Stock prior to conversion, as described in footnotes (1) and (2) above, such number of shares (and therefore the number of shares offered hereby) cannot be determined at this time.." It points out some interesting dynamics: 1. This fund had plenty of shares to short beforehand. This is a strategy that is apparently used in these deals, since the stock price will decrease with the conversion - either in the case of dilution or the increasing short position. In that case these shares could have been used to cover this pre-existing short position. 2. The preferred holders owned 3.5M shares that could have been shorted initially with 21M shares being offered as conversion shares. 3. Until I looked it up - I forgot the preferred holders are all listed in the S-3. I had no idea they would be listed as insider transactions. I am currently working on how to find out the conversions before they are posted as formal SEC documents. 4. I don't think they need to cover in short rallies. They certainly don't if they are short against the box. They can unwind, short again at the slightly higher price and ride the price back down. The large overhang allows them to do this. All in my opinion and if I was a financial expert I probably would not be long ANCR at this time - but I am. George D.