"Among the weblogs, the best coverage of the Churchill controversy has been in View from a Height..." -Dave Kopel, Rocky Mountain News

"In Colorado, the Rocky Mountain Alliance of Blogs is covering the hot GOP primary between beer magnate Pete Coors and former Rep. Bob Schaffer with a great deal more insight than the Denver newspapers." -John Fund, OpinionJournal.com

"The Rocky Mountain Alliance offers the best of what the blogosphere has to offer." -David Harsanyi, Denver Post
Joshua Sharf

 notify list
to receive email when this site is updated, enter your email address:
 recent posts
Blogging 26 entries
Book Review 9 entries
Business 96 entries
China 2 entries
Colorado Politics 55 entries
Decision 2008 1 entries
Finance 6 entries
Flying 3 entries
General 83 entries
Higher Ed 28 entries
History 2 entries
History 2 entries
Israel 15 entries
Jewish 15 entries
Judicial Nomination 3 entries
Media Bias 5 entries
Movies 6 entries
Road Trip 5 entries
Social Investing 1 entries
Vote Fraud 7 entries
War on Terror 64 entries
Rocky Mtn. Alliance
Exultate Justi
American Kestrel
The Mangled Cat
Clay Calhoun
Mt. Virtus
My Damascus Road
Best Destiny
Thinking Right
The Daily Blogster

Friends of the Alliance
Bill Hobbs
Mile High Delphi
Flight Pundit
One Destination
Conservative Eyes
The Virginian Reporter
A Time for Choosing

other blogs
Oh, That Liberal Media
Girl In Right
One Big Swede
American Thinker
Meryl Yourish
NRO Corner
Little Green Footballs
No Left Turns
A Constrained Vision

business blogs
Carnival of the Capitalists
Cold Springs Shops
Commodity Trader
Coyote Blog
Different River
Fast Company Blog
Financial Rounds
Freakonomics Blog
Management Craft
Trader Mike
Carnival of the Capitalists Submission

business data
Inst. Supply Mgmt.
St. Louis Fed Economic Data
Nat'l Bureau of Economic Research
Economic Calendar
Stock Charts
colorado blogs
Boker Tov, Boulder
Colorado Pols
Jeff Sherman

<-?Colorado BlogRing#->

sites, not blogs
Thinking Rock Press
 help israel
Israel Travel Ministry
Friends of the IDF
Volunteers for Israel
Magen David Adom
 1939 World's Fair
1939: The Lost World of the Fair
The New York World's Fair: 1939-1940
The Last Great Fair by Jeffrey Hart
Iconography of Hope (U.Va.)
Images From the '39 Fair
 google ads
Powered by
Movable Type 2.64

May 05, 2005

Hedge Fund Hijinks

I had written before that hedge funds and other major MCI shareholders might have been manipulating the Verizon-Qwest auction process to accept a Qwest bid loaded with equity, that they would then have to race to dump. Now, it looks as though some of them were also manipulating Qwest's share price to help keep that bid credible when it was financially unsound.

The Denver Post first reported last week that Qwest's stock spiked during the last 15 minutes of trading on the New York Stock Exchange from March 28 to March 30 to close above a critical price threshold known as a "collar."

Had Qwest's stock closed below the collar, investor confidence in Qwest's bid for MCI could have been shaken. Qwest was dueling against Verizon, which this week locked in a merger agreement with MCI.


Maintaining a certain stock price was key to Qwest's offer for MCI, which in late March was $26 a share in cash and stock. Qwest guaranteed the value of its stock within a 10 percent collar above and below $4.15 per share. Below the collar, MCI shareholders would receive less value for their Qwest stock.

Actually, since the number of shares, rather than the dollar value, was specified in the deal, any drop in share price would have cost MCI shareholders money. The collar was there to limit, not eliminate, such risk. Had Qwest decided to try to make up the difference with even more shares, they could have crossed the 50% threshold beyond which MCI would, in effect, have been buying a controlling interest in Qwest.

Since MCI shareholders clearly wanted cash more than they wanted to run a telecom, this wasn't quite the deal they were seeking. Moreoever, under federal M&A laws, it would have changed the entire structure of the deal, affecting valuation, taxation, and the ability of shareholders to resell their newly-acquired Qwest stock.

In fact, this kind of manipulation, if it in fact happened, is grossly illegal, and harkens back to the Wild West on Wall Street, detailed firsthand by Bernard Baruch and secondhand by Charles Geisst.

Whether or not it happened, the fact that it could have will likely be enough to stir up more calls for further regulation of hedge funds. That's too bad, because there's no inherent reason why funds, any more than individuals, should be restricted in the kinds of investments they can make.

Posted by joshuasharf at May 5, 2005 01:34 PM | TrackBack

Blink: The Power of Thinking Without Thinking

Back in Action : An American Soldier's Story of Courage, Faith and Fortitude

How Would You Move Mt. Fuji?

Good to Great

Built to Last

Financial Fine Print

The Balanced Scorecard for Public-Sector Organizations

The Balanced Scorecard for Government & Non-Profits

The Balanced Scorecard: Measures that Drive Performance

The Balanced Scorecard: Translating Strategy into Action

The Day the Universe Changed


The Multiple Identities of the Middle-East

The Case for Democracy

US Policy in Post-Saddam Iraq

A Better War: The Unexamined Victories and Final Tragedy of America's Last Years in Vietnam

The Italians

Zakhor: Jewish History and Jewish Memory

Beyond the Verse: Talmudic Readings and Lectures

Reading Levinas/Reading Talmud