OceanFreight Inc fka OCNF

[Wheeeeee]

I used to trade this .. then i found out why this thing is trading so badly. Someone on another board was so kind as to explain it. As a disclaimer: this is all just hearsay.. so read the following as entertainment only.


Their financing is done by Yorkshire.

When there is convertible debt there is often a minimum price against which the debt can be converted.
This means that if i lend you $100.000 that i can chose to either get $100.000 + interest from you OR i trade it for shares that you write. So i trade the debt against 100.000 shares at $1 at some point.
As I said there is often a minimum share price for the conversion meaning that even though the current market price per share might be $0.30 that I would not get shares cheaper than $1.
So if you owe me 100.000 i only get 100,000 shares and not over 300.000 shares because the market price is at 0.30.

The debt construct between ocnf and yorkshire does not have a bottom price. They get shares equal to the outstanding debt at the current market price. So if the stockprice is 30 cents they would get 333.333 shares. If the price is at 10 cents they get a million.

So they short the stock into oblivion. They totally and utterly drive this thing into the ground. Why ?

well ...

at some point they must cover the shares short. So they simply convert debt into shares and use that to cover. The stock dilutes like mad by the conversions.