RE:RE:What is happening?!? SP falling? Please explain! mrmoribund wrote: This kind of thing is not uncommon. People are selling the shares to buy the convertible. It surprises me that the shares are getting hit this much given the large premium on the conversion (at $3.80). I would much rather own the common at these levels.
It may be that some hedge funds are getting involved where they buy the debenture and SHORT the stock. We'll get a sense of the degree to which that's happening when the short interest numbers next come out. For sure you'll see a jump.
I don't think a hedge fund would bother due to the usually low transaction volume and lower market cap. So far, 680 000 shares have changed hands, for a value of around $2M. That's fairly small for a hedge fund.
The convertible debentures represent around 13M shares at conversion price. If 20% of the buyers sell common shares to buy the debenture, then that would add a pressure of 2.6M of shares on the sell side. If you believe that Quarterhill's upside is $9, then losing $1 in potential gain to get interest payments might be worth it, as you also get protection from bearish scenarios.