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Corrections Corporation of America Message Board

  • flipper_58 flipper_58 Oct 9, 2000 3:24 PM Flag

    pkn4mom

    I'm sorry I seem to be picking on you, I don't
    mean too but as blackrock says...some folks seem to be
    taking your advice to possibly hold the pref.b because
    it takes less thought and is easiest. Holding the
    pref. B versus converting is NOT an option and NO ONE
    should even consider it. The orginal $24.46 dividend has
    already declined 25%. It will decline easily 75% by mid
    Janaury of 2001. Your ONLY chance to save your orginal
    $24.46 is to convert in the second round and sell ASAP.
    Conveting now will not make you whole on the dividend since
    the common is a $1 and the conversion price is $1.48.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • I'm not offended. I read your intentions as
      sincere and your opinions as being what you believe to be
      in everybody's best interest.
      But I disagree
      with your position of certainty regarding what's going
      to happen over the next few months. I'm not saying
      that I think you're wrong--it's a logical and quite
      possible scenario--but if I've learned anything here it's
      not to expect the expected. I'm converting this time.
      If your theory plays out, then I can repurchase some
      B before December. But I don't want to miss out on
      the chance that the common will have reason to go
      above $1.48 before then. If I'm wrong, then I'll just
      have to wait longer--or I can sell the common. You
      said that you sold your B shares @ 18. By converting
      now, all I need is a common price of $1.09 to get the
      same deal that you did. Point is, everyone has to make
      an informed decision based on their own perspective.

      • 2 Replies to pkn4mom
      • I hope you meant that you will repurchase B's
        before December and convert them during that December
        conversion period. But if that is the case why not just hold
        the common and save some brokers fees or wait till
        the second period to convert?

        The arbs action
        is baffling at the present. Best I can tell they're
        betting that the price will go below $1 during the second
        measurement period. If the common price stays about where it
        is today or goes up then the second conversion is
        worth much closer to the $24.Only if it goes below $1
        is it worth less than $24.

      • I sold some pref. B at $18 that I had bought at
        $16. I have not owned any common for a long time. I am
        actually short a lot of common that I will convert the
        rest of my pref B shares to cover my short postion. My
        feeling is the next conversion price will be lower than
        this one.

        Each day the pref B trades more stock
        this represents more shares for sale since anyone
        paying this present price most likely will convert.
        Today 9,200 shares of the PIK traded....this represents
        225,000 new share created today and these shares will be
        for sale most likely. Since trading regular way
        2.25mm new shares have been created by pref B be sold,
        if the conversion is $1. This is a BIG over
        hang.

        The arb ratios are fairly easy. You can even buy the
        pref B here and make a few bucks on the conversion at
        this level. If you pay $18 for the PIK you will
        receive 16.6 shares. Selling 16.6 shares at $1.125 gives
        you sale proceeds of $18.675. I'm holding out though
        for the second period....this is just a guess. But
        see why it's going to be hard for this stock to make
        a run with this type of stuff going on? It's not
        evil, because without this activity there would be NO
        buyings of the PIK even close to this level.

        The
        best of luck to both of us pkn4mom.

    • Interesting dialogue. Each have merits and I'm
      trying to select the best of these options.
      FWIW, I
      wont keep the B for long term "income". I've already
      gone that route with PZN, from the 20's down to
      bedrock! Therefore I will be converting. When? Here, I
      guess I'm still optimistic, in that I feel Ferguson
      will come out with enough good news to push CXW up
      over $1.50 by December. Hence, it's now for
      me!
      Should I change views and decide to go for long term
      income, I agree with Flipper and would choose the A. But
      that's unlikely th way I am thinking now.
      Bottom
      line, my action plan is to convert this week, with the
      hope that I can finally get something right on this
      elevator ride!
      Good luck, however you choose. May we
      all end up ahead of the game, sooner rather than
      later.
      Thanks to all contributors for your views and
      input on this conversion. A great example of how a
      board should be an information source for serious
      investors.

 
CXW
35.15+0.06(+0.17%)Oct 22 4:05 PMEDT

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