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AEROJET ROCKETDYNE HOLDINGS, IN Message Board

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  • dodilligence dodilligence Feb 5, 2010 1:07 PM Flag

    Surprising Stock Reaction...

    My guess is they sold the convert issue to some nasty hedge funds that have been shorting the stock since they are now hedged by owning the convert. It would have been less dilutive to issue straight equity to investors that liked the company, but investment bankers sell converts like ice to eskimos.

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    • Re: "My guess is they sold the convert issue to some nasty hedge funds that have been shorting the stock since they are now hedged by owning the convert."

      Well, the convertible debentures are set to convert @ $9.00/share. If these funds are now shorting down in the $5-$6 range, how is that a hedge? If the stock moves back up toward the conversion price, they will have to cover the short for a big loss. Please explain your rationale? Thanks.

      BTW -- I bought more today @ $4.55. It still looks like a gift for the patient investor.

 
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