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Strategies & Market Trends : Shorting stocks: Broken stocks - Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Q. who wrote (2049)	12/21/1998 7:57:00 AM
From: RockyBalboa	Respond to of 2506

John, re BTIM There was somebody on one of these threads who was short common stock that issued rights, and he reported that he was then short not only the common but also the rights. I've forgotten what the outcome was, though. That was about SIEB/SIEBR $7 strike rights - and I think on this or the "mechanical aspects" thread back in August when the SIEB rights have been registered. My first thought went into the same direction, too. Short the rights by shorting the stock right before the record date and buying the sole stock back after the separation of the rights occurred, sitting out the rights going back to 1/16th. However in a bullish environment (for BTIM, too?) and with that little ratio, a buy BTIM / or simply buy rights - short BTIM and oversubscribe the rights - an arb play could work out. Have to do some numeric examples on that, however. I understand the process as it is bit more complicated, like that: Fist a definite record date will be set. Then, 5 days preceding that record date will be measured for calculation of the then to be fixed exercise price. Then an amendment for the rights registration could be filed - thus fixing the price of the to be issued common. After that, the rights are separated from the stock - and presumably listed on the nasdaq. The oversubscription right of BTIM stock can also be done when the rights aren't originally owned by separation of BTIM stock, but acquired on the exchange. C.

To: Q. who wrote (2049)	12/21/1998 10:11:00 PM
From: Harpo	Respond to of 2506

ENML Hello John, Did you notice that ENML announced a convertable today? edgar-online.com regards, bb

To: Q. who wrote (2049)	12/21/1998 11:17:00 PM
From: Geigartt	Read Replies (1) \| Respond to of 2506

<<What happens if the rights are not exercised? They are simply cancelled and expire worthless?> <<That's right! And these rights will trade as listed securities on nasdaq.>> <<Which brings to mind this idea: could you just short the rights on the speculation that you might get lucky? If the owner you borrow from doesn't exercise, then the rights you short will expire worthless. >> My question will reveal how little I know about rights, but if you short the rights and they are not exercised and expire worthless, does that mean you don't have to cover the short, i.e., do not have to replace the shares, i.e., "money for nothing"?