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Gold/Mining/Energy : Harken Energy Corporation (HEC) -- Ignore unavailable to you. Want to Upgrade?

To: SliderOnTheBlack who wrote (4019)	1/5/1999 11:08:00 PM
From: Zeev Hed	Read Replies (1) \| Respond to of 5504

Slider, first, the short position is reported only once per month, so we have no idea what exercise are played in between. As for the sub $5 rule it applies only when shorting against margins, not in hedging positions (which by definition, it is assumed that the convertible holders do as an hedge). Last, almost the whole cash cache of HEC came from convertible instruments which sooner or later are going to convert to equity. Last, HEC has a huge CAPEX ahead of itself in developing their Colombian properties, this year they spent relatively little (and now, I believe have a single rig in operation), to maintain their leases they have to meet certain drilling schedule or relinquish parts of their leases, thus the cash, while indeed quite comfortable, is not there forever. Last, I am reminded too much of AKSEF (another Strain darling with multi billions barrels potential fields) that went out at $2/share with close to a buck in cash, fewer shares and three times as much proven reserves then HEC. They simply could not raise conventional financing and after having been the victim of their own floorless issue (raising the stock count from 25 MM to close to 90 MM shares), decided not to go the floorless route and sell at a big discount of their fair value (based on future cash flows). Zeev