Cash & Hemlock Partners LLC
December 27, 2006 1:58 PM Subscribe
EarthShell, a small Maryland company that makes environment-friendly packaging (among others) may wink out of existence thanks to PIPEs, or private investments in public equities. Who likes PIPEs? Hedge Funds, mostly. Companies that take the pipe, as it were, may be sealing their doom. 10 percent of PIPE deals done this year are 'death spirals', where the company's stock price plummets from short selling by the financiers who structured the deal in the first place. And of course it's legal if you don't get caught shorting the stock naked and covering with the shares from the PIPE. (BTW, http://www.earthshell.com appears to be on the margins now or I'd have linked it).
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