Yeap.
I would like to add that in limited circumstances, certain convertible bonds can even be sold short, thus depressing the market value for a stock, and allowing the debt-holder to claim more stock with which to sell short.
They call this "the death spiral financing"...
I hope this explains the whole issue more clearly... I just do not see how the stock price will go up after FEB unless SIRI pays for those converts in cash or get someone else to pay for them.
Last edited by Siriusowner; 01-30-2009 at 12:51 AM.
Siriusowner,
You are wrong again and you continue spreading a bunch of false information all over this board. "Death Spiral Financing" is not characterized by the shorting of the bonds, only the shorting of the common.....
http://en.wikipedia.org/wiki/Death_spiral_financing
Death spiral financing is a process where convertible financing used to fund primarily small cap companies can be used against it in the marketplace to cause the company’s stock to fall dramatically and can lead to the company’s ultimate downfall.
Many small companies rely on selling convertible debt to large private investors (see Private investment in public equity) to fund their operations and growth. This convertible debt, often convertible preferred stock or convertible debentures, can be converted to the common stock of the issuing company often at steep discounts to the market value of the common stock. Under the typical “death spiral” scenario the holder of the convertible debt initially shorts the issuer’s common stock which often causes the stock price to decline at which time the debt holder converts some of the convertible debt to common shares with which he then covers his short position. The debt holder continues to sell short and cover with converted stock which along with selling by other shareholders alarmed by the falling price continually weakens the share price making the shares unattractive to new investors and can severely limit the company’s ability to obtain new financing if the need arises.
An important characteristic of this kind of convertible debt is that it often carries conditions like a quarterly or semi-annual reset of the conversion price to keep the conversion price more or less close to the actual stock price. But a lower conversion price also increases the number of shares that a bond holder gets in exchange for one bond, increasing the dilution of existing shareholders. A lower price reset can also force investors that have set up a long CB/short stock position to sell more stock ("adjust the delta"), creating a vicious circle, hence the nickname death spiral.
Last edited by Demian; 01-30-2009 at 02:14 AM.
This was what I was waiting for. You just proved me right. I read that article way before you did. Re-read all the other posts, I just took excerpts and use my own wording.
And I knew YOU were going to google "Death Spiral Finacing" (that was the bait, why did you think I wrote that in a separate sentence ?).You made a mistake by searching only for "Death spiral financing" though & I am going to prove it to you. Where do you think the following definition came from ? Google it !
"Convertible bonds are usually issued offering a higher yield than obtainable on the shares into which the bonds convert.
Convertible bonds are safer than preferred or common shares for the investor. They provide asset protection, because the value of the convertible bond will only fall to the value of the bond floor. At the same time, convertible bonds can provide the possibility of high equity-like returns. Also, convertible bonds are usually less volatile than regular shares.
The simultaneous purchase of convertible bonds and the short sale of the same issuer's common stock is a hedge fund strategy known as convertible arbitrage. The motivation for such a strategy is that the equity option embedded in a convertible bond is a source of cheap volatility, which can be exploited by convertible arbitrageurs.
In limited circumstances, certain convertible bonds can be sold short, thus depressing the market value for a stock, and allowing the debt-holder to claim more stock with which to sell short. This is known as death spiral financing."
Did I use it all ? or just an excerpt ?
Unfortunately for you, I also have a bond encyclopedia. So, don't say that I am wrong because when I am wrong I admit it... and not when you say so.
Anyway, now you know what is happening with this doomed company...Yes, doomed !
Last edited by Siriusowner; 01-30-2009 at 03:01 AM.
Siriusowner,
You are really making no sense at all...
All I said was that "Death Spiral Financing" is not characterized by the shorting of the bonds, but rather the common - which is true! Your wording implied that "Death Spiral Financing" was characterized by the shorting of the bonds - which is not true.....
What was I wrong about again?
You have already admitted that you get your jollies from ****ing with the people on this board........which adds nothing to the knowledge base.
Last edited by Demian; 01-30-2009 at 04:11 AM.
On the contrary, it all makes sense but, I am just going to answer this question: "What was I wrong about again?"
I will number the times your were wrong:
1.- Buying SIRI stock
2.- Buying SIRI stock
3.- ...
Wait a minute... your were right, you were wrong only once. Well maybe more than once if you kept buying last year, but it was the same mistake over and over, which is worst than being wrong several times over different issues. This tells me you do not learn and that you are stubborn...
Stubborness is the demise of any investor and trader...Stubborn investors hold their positions into oblivion.
What I think is that you do not need to be more wrong than that...
Last edited by Siriusowner; 01-30-2009 at 12:16 PM.
are you saying you spend all this time in this thread and dont own stock in it
Siriusowner,
I know you like to think that you're smarter than everyone on this board. But just because you know how to use google doesn't make it so. The following statement from yesterday proves that you didn't know much about the February bonds... You do now, because of our discussion yesterday and the fact that you looked it up. Show a little humility from time to time. It might garner you a little more respect.
that .12 cent mark is holding strong, wish we could blow right past that bitch.
http://www.tuaw.com/2009/01/30/satel...ing-to-iphone/
Satellite Radio finally coming to iPhone
by Mel Martin on Jan 30th 2009
Ever since the iPhone could run applications people have been really excited about the possibility of streaming XM-Sirius on the go. After a lot of buzz, it appears the uSirius StarPlayr will finally be submitted to the app store this weekend.