Shorts, converts, and consequences
the WSJ today highlights that it turns out that the short selling ban even harms the companies it's meant to protect - as some of these companies struggle, they would normally raise money through convertible bonds. Only problem is that a major buyer of these issues are hedge funds. Who rationally and almost always hedge/arb these bets by shorting the underlying equity. With the ban on shorting somehow the bottom has fallen out of demand for converts...which could wreak havoc for the companies (as they try and fail to raise money) the SEC is purportedly trying to protect.
On a separate note, as temporary author of this blog I will admit immediately to being much more skeptical of the govt bailout in its current form than the patriarch, Norm, himself. So I'm glad to see some in Congress (like Jim DeMint) opposing quick passage without examining moral and economic consequences of such action...
On a final note, the Franklin Gold Star of Freedom goes, today, to those funds/publicly traded companies who have asked to be taken off the short-selling ban list. And I'm hoping the next recipient of this prestigious award is the entity who successfully enters a persuasive case in Federal court claiming that soon-to-begin reporting of short positions is a violation of fund managers' intellectual property.
On a separate note, as temporary author of this blog I will admit immediately to being much more skeptical of the govt bailout in its current form than the patriarch, Norm, himself. So I'm glad to see some in Congress (like Jim DeMint) opposing quick passage without examining moral and economic consequences of such action...
On a final note, the Franklin Gold Star of Freedom goes, today, to those funds/publicly traded companies who have asked to be taken off the short-selling ban list. And I'm hoping the next recipient of this prestigious award is the entity who successfully enters a persuasive case in Federal court claiming that soon-to-begin reporting of short positions is a violation of fund managers' intellectual property.
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