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

To: Bruce A. Thompson who wrote (210)	12/13/1998 10:58:00 AM
From: Bruce A. Thompson	Read Replies (1) \| Respond to of 1438

More on Story of the Year by: portfolio_mngr 450 of 455 Top Stories: Coyote Insiders Register to Sell Shares By Kevin Petrie 12/9/98 10:07 AM ET Just a month after securing a listing on the Nasdaq, Coyote Network (CYOE:Nasdaq) has given notice that some of its backers and executives will be free to sell as many as 5.4 million shares as various warrants are converted into stock. Currently 10.5 million shares are outstanding. Coyote stock has risen from about 10 to as high as 16 3/4 since joining the Nasdaq Nov. 5. On Tuesday, shares dropped 1/4 to close at 14 1/4 According to documents filed Dec. 3 with the Securities and Exchange Commission, numerous insiders are poised to sell huge chunks of their holdings. These stockholders say in the filing that they might make the unusual decision to short their own company's stock. By selling shares short, a person aims to profit on a fall in the share price. Company spokesman Tony Squeglia says Coyote insiders are simply registering stock that underlies warrants they received in the summer of 1997. He denies that managers intend to sell, but that's exactly what this registration will enable them to do. "You don't file an S-3 unless you plan to prepare your shares for eventual sale or some kind of trade," says Bob Gabele, president of CDA/Investnet, a service that tracks insider trading. He says those trades might include hedging, shorting or selling. "Somebody's thinking about selling stock." At the time of the registration, the shares were trading at 16. Using that price, as much as $86.6 million in stock will be offered for sale. CEO James Fiedler will be able to offer one-third of his position for sale, according to the S-3 document, which says he can sell up to 183,750 shares. That includes stock obtained through warrants that were priced under $3 per share when issued in mid-1997. His spokesman and partner Tony Squeglia has the ability to sell about 16,000 of his 42,000 shares, some obtained through warrants priced under $3 per share. Still, he insists they will not pull out. "The management of the company is not selling shares," Squeglia says, speaking only for himself and Fiedler. Michael Fantetti, an outside investor, can choose to divest himself of 33% of his stake, worth $1.9 million if the $16 share price holds. Fantetti had obtained warrants that are exercisable at $2.86 per share. Squeglia did not call TSC back with a phone number or address for Fantetti. But someone using the alias "mfantetti" has been an aggressive defender of Coyote on the Yahoo! and Silicon Investor message boards. "This company is poised for an explosion in revenue, and of course earnings," "mfantetti" wrote early on the morning of Nov. 26. According to SEC documents, Michael Fantetti on Sept. 8 filed a Form 144 -- a notice of the proposed sale of restricted securities -- to sell 22,000 shares. Also filing to sell is the JNC Opportunity Fund, administered by Olympia Capital in Bermuda. JNC will be free to sell 2.6 million shares worth $41.6 million (again, assuming a price of $16 a share). An Olympia official took a message for JNC management, but JNC did not return inquiries by TSC. New York-based hedge fund Strategic Restructuring Partners is registering all 1.3 million of its shares, although managing partner Richard Haydon says he doesn't intend to sell. Haydon's portfolio also includes warrants that are exercisable at less than $3 per share. Another bearish sign: The SEC registration document says these stockholders might short shares of Coyote. "From time to time the selling stockholder may engage in short sales [and] short sales against the box," the document says. Neither the SEC nor the Nasdaq has any rules barring insider short sales, but Gabele calls this type of provision a "yellow flag." Sometimes insiders decide individually to short or somehow hedge their positions, Gabele says. But it is unusual for a company to state this possibility outright in an SEC filing.