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.

Gold/Mining/Energy : Canadian Oil & Gas Companies -- Ignore unavailable to you. Want to Upgrade?

To: Goldberry who wrote (5660)	12/4/1998 11:27:00 AM
From: AL R	Respond to of 24927

Graham / Remington Obviously large holding is dumping, but I think a little early due to potential hedging. The terms haven't been announced yet. Several factors maybe entering the picture. Funds will be adjusting for year end, tax loss selling, large debt, general outlook poor for oils, etc. Leading the TSE most active this morning and up 0.35 on 2.5 mil shares last I looked. quote.yahoo.com Just some thoughts. Take Care, Al

To: Goldberry who wrote (5660)	12/4/1998 11:27:00 AM
From: Kerm Yerman	Read Replies (1) \| Respond to of 24927

Graham / Convertable Debentures And Shorting Funny you should mention this subject. I received an e-mail message from a friend last night which touched upon the same. Here is what the person had to say. -------------------------------------------------------------------------------------- Regarding Remington: I haven't been following them and don't know anything about their debenture issue. The following may not applyin their particular case at all. However, I offer the following comments as something which other investors may wish to investigate when holding stocks which have issued debentures. I hope that I have described this type of investment activity properly. I thought that you might like to check into this further. I am reluctant to post this on the Can. O & G thread because it may not apply in the case of Remington and I wouldn't want to create a negative impression concerning it. However, I do know that most people aren't aware of the following, but I consider it to be an insidious problem. Last year, a fellow threadster forwarded some material to me (a report from a brokerage firm) which described a practice which, according to this report, is quite common. It described the appeal of holding convertible debentures and then taking out a large short position which could be used to generate "income", especially when a commodity price such as the POG or BOP is poor and subject to fluctuation. In this particular case, the debentures were on a small mining company which got into a bad cash crunch when the POG dived. The threadster and I both owned shares in this company at the time and he thought I would like to know what was "going on" as the stock was gradually pounded into the ground. Incidentally, this was a "highly recommended" stock which was listed on the TSE 300 as a mid-range gold producer. A lot of us bought in at $3.00 and now the stock is trading at about $0.09. Anyhow, to continue.... apparently this shorting activity is basically "risk-free" because, in the event that the market suddenly becomes strong, the debenture holder can easily cover their position. So, in effect, the investor will "win" regardless of which direction the market is running. In the case of this mining company, it developed a rather hideous short position which fluctuated wildly between being there and then disappearing after. There was very high volatility on this stock as people "traded" in and out of the stock through the particular brokerage firm that had issued this report with the recommendation of purchasing debentures and then shorting the company. After that "experience", I began watching other companies with debentures and noticed that many of them carry large short positions. They also have a lot of volatility and are probably subject to a lot of manipulation. Now that I know more about this practice, I would be reluctant to hold a stock with a large debenture issue. Anyhow, those are just a few musings. I don't know if I have all of this information right, but if you have a "friendly broker" you might like to talk to them about this "practice" to see if I have described it accurately...and also if it is as common as I think it is. Take care... I still drop by to lurk on the thread occasionally although I don't have as much time to visit SI these days.