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The explanation given by them makes no sense:
1) I had no problem finding out about the convertible bonds in AMD’s SEC reports. If you don’t look, it’s not their fault.
2) It doesn’t make a whole lot of sense for convertible bond holders to engage in this. The higher AMD’s stock price is, the more the bond is worth; the lower the price, the less it’s worth. Effectively, you’re betting against yourself.
3) I would suspect that if holders of these bonds wanted to convert, they would have done so when AMD stock was much higher.
4) The only way this strategy “works” is if speculators bought up these convertible bonds, converted them to common shares, then sold them. That would put extra downward pressure on the stock. That should be easy enough for AMD to prove or disprove.
5) Just holding the convertible bond and selling other shares puts no more pressure on the stock than any other short selling. If you’re a long-term holder, you get no more out of it than it you just short-sold, nor do you end up with any more net profit should the stock go the other way and you have to cover.
6) I think the combination of Fidelity selling off a huge chunk of their AMD investment over the past couple months, general negativity about chipmakers and perhaps some short-selling sharks smelling blood explains the market’s drop well enough. We don’t need any conspiracies to explain this.
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