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February 27th, 2009 at 3:53 pm
Here’s the deal on C…..
Apparently, the announcement of the Preferred to common converesion was a huge instant arbitrage.
The preferreds traded yesterday at 5. This deal announced today, converting into stock, made them worth $10 in C shares (convert into like 6+ shares for each preferred).
The reason you have 1.7 Billion shares trading is that hedge funds jumped all over this, buying preferred at $8 (price jumped up, but not all the way), while relentlessly selling (shorting) C shares.
C & the Gov’t are freaking idiots; and obviously shareholders got completely hosed on this deal because they should have known exactly what would happen.
And the public doesn’t know. I just had some hedge fund friend explain this to me.