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

To: George Dawson who wrote (18921)	10/29/1998 2:42:00 AM
From: Eleder2020	Read Replies (1) \| Respond to of 29386

>>I forgot to add that the rate of conversion of 3M shares/month is greater than the proposed rates <<< George- I think it was 2 million shares a month as the last count was at 13.7.They probably converted the maximum this quarter plus some backlog from other quarters(not sure they are even allowed but the numbers don't jibe any other way)as the rates conversion rates were more favorable to the Reg D holders this quarter.Greg-Can they do that. I think their are a few ways to slice this onion.The way I see it the best thing to do is try to speculate at what The Reg D's end game would be. We know two things and everything else in this post is speculation. 1)2.2 million short 2)19.7 outstanding shares Lets take what I think would be the high final share count not counting Inrange warrants. I'm putting that at 25 million and if the stock price stays propped up and doesn't go back to we are looking at somewhat less. Also let's be a little conservative and say the Reg D shareholders have a short count of 1.6 million instead of 2.2 million That leaves a maximum of 5.3 million shares(gets us to 25 mil shares) to convert or to short less 1.6 million that are needed to box(cover) the short. Subtracting my present short count leaves us with a maximum of 3.7 million to convert and that's only if Ancor stock price falls from here. Say they went ahead and shorted another 200K shares next month and they convert another 2.4 million dollars(that's about 15%) in stock which at todays conversion rate would give them an additional 1.3(ballpark) million shares. So in effect they have converted another 1.3 million shares and they are now short 1.8 million shares. Now the Reg D holders have only $4.6 million to convert and if Ancor's price stayed at $ 1.75(for arguments sake) over the next two months that would leave them with 2.5 million shares to convert. From that 2.5 million shares they would have to use 1.8 million to box their position leaving them only 800K shares left over and not any room to short.If the short was unsuccessful in taking the wind out of Ancor and Ancor miraculously shot up to 4(OEM) in the last two months of the conversion the reg D holders would actually have one heck of a shortfall to box their conversion. If anybody has gotten this far your probably wondering if their is actually a point here. Well the punch line is that as ANCR rises in price it is still a sweet deal for the Reg D guys to short but it takes on some realistic and serious risk given that the fundamentals continue to improve.One thing about them is that they are adverse to any risk. My speculative conclusion is that The Reg D holders have at best one more riskless shot at shorting(200K shares for the quarter) and I could make a case that they are out of bullets.I have a few other scenarios that are completely different but this one seems the most sense. Now the Caveats-Somewhere in a REGD strong box could be sitting the total amount of 2.2mil certificates that are needed to box the entire short in which case you can throw out this entire post and they have a few more months to short big. We could also see some wholesale selling from the long term REGD holders who will start showing substantial profits from converting at 1.This could but shouldn't happen as once they convert it is in their best interest to sell slower and maximize their profits. Ed

To: George Dawson who wrote (18921)	10/29/1998 6:55:00 PM
From: Greg Hull	Read Replies (1) \| Respond to of 29386

George, <<I forgot to add that the rate of conversion of 3M shares/month is greater than the proposed rates of a previous model for the maximum conversion rate (post 18764). Greg, is my arithmetic off or are they really turning over the stock more quickly than we think?>> If the 15% limit is in place, the Series C shareholders as a group can convert 165 preferred shares/mo. If all of the Series B shares were converted since 8/26/98, this is an additional 299 shares, for a two month total of 629 shares. With the conversion rates in the neighborhood of 10,000 common shares per preferred share for the last couple months, we could have seen as many as 6.29 million new shares issued. We saw only 5.85 million new shares issued. Also, If there is $7M remaining, this means that only 579 preferred shares were converted, which should have resulted in common shares outstanding of 19.64M. This is pretty close to the reported value of 19.7M. To answer your question, if they convert at the maximum rate we would see about 1.5M new shares/mo issued (now that Series B is gone). These shares would be sold immediately (long or short) or else held for investment. At this rate, it would take 5 more months to close out Series C. However, it could be closed out by January since the 15% is cumulative. The Citadel Entities did not convert at the maximum rate for the first two months, so they could recover now if they wanted. What is the end game? I wish I had a clue. Greg