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Technology Stocks : Network Associates (NET)
NET 83.43+1.5%4:00 PM EDT

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To: Tim Robbins who started this subject8/8/2001 4:28:18 PM
From: AlienTech  Read Replies (1) of 6021
 
Anyone remember the last bonds they issued for like 500 mil? Conversion price was like $48.. The stock was at the time like $45 or so. They do this because of the shorting provision and they want to make sure if you do short against the box you loose some of the profits.. Anyway the stocks never seen that price again and never will! But looking at the short position they have either covered already or its unreported short.

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(So, the goal here is to get short the common stock and then knock it down to profit from that short position. You don't have much fear of a squeeze up because the worst that happens is that your bond is converted into common stock and you are protected. It is a great deal for the bad guy! You profit from the short. You get protected from the squeeze, risk free, because of the conversion provision. You get income on the short stock, known as rebate income. That's the interest on the credit balance generated by the short. You get the coupon from the bond. And the worst that happens is that the company's stock plummets and it runs out of capital and you get 100% of the money you made when you shorted it, plus the interest that you picked up and you get wiped out on the bond. Big deal! You don't care. You have shorted $100 million worth of common stock. The same amount you gave to the company on the bond!!! It is a push plus huge interest return.)

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