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.

Technology Stocks : VALENCE TECHNOLOGY (VLNC) -- Ignore unavailable to you. Want to Upgrade?

To: lws who wrote (9670)	3/22/1999 10:31:00 AM
From: Zeev Hed	Respond to of 27311

lws, it seems that CC did use the floorless feature exit strategy in some other investments they had (Osicom is one), so you cannot rule out their using this parachute if VLNC (or should I say Mr Murphy) gets in their way. As a hedge fund, it is their job to find market inefficiencies and exploit these. The floorless instrument they have allow them to do just that. Internally, they may have decided to short whenever the stock goes above a given price (let say for argument sake $7.75) and cover whenever it goes under a certain price (and let say this is $7). In essence they are acting like market makers in moderating the over enthusiasm and the extreme pessimism. The important point is that they can short with impunity, or at no risk while still being paid their basic 6% interest, and that is in fact the business they are in. Nothing sinister about it. They may change their mind about the boundaries at any time, of course. If the stock start and run away, they'll keep shorting (up to about 2.6 MM shares), if the stock starts to break down, by July they have the floorless feature that allows even greater shorting. In the former case, they collect much more than their investment, and after July 27, they can collect more than their investment at anytime by massively diluting if the stock breaks under $6/share. Zeev