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5 Feb 2008

PIPEs & Opportunities For Hedge Fund Managers

On Febuary 15th, 2008, a reduction in the Rule 144 holding period for restricted shares of public companies will take effect. The holding period, which is being shortened from one year to six months, will result in billions of shares from thousands of companies becoming eligible for public resale on that day.

A new report by Restricted Stock Partners examines 300 transactions and 258 issuers, showing 66% of the issuers highlighted as having greater than three months of their average daily trading volume eligible for sale on Febuary 15th.

The report is based on research on companies that issued unregistered securities in connection with Private Investment in Public Equity (PIPE) deals during the affected period. Hedge funds are the primary investors in the affected shares (many of which are from PIPEs).

37% of affected issuers will have greater than one year of their average daily volume eligible for sale and one-third of affected issuers in the Report will have greater than 25% of their market capitalization eligible for sale on the same day.

“Hundreds of companies may see share amounts equal to 100 or more times their average daily trading volume available for sale on Feb. 15,” according to Barry E. Silbert, founder and CEO of Restricted Stock Partners. “While it is difficult to predict what impact this will have on share prices, investors will certainly want to be familiar with the companies that may be affected.”

The RSTN has already attracted more than 400 members, including global financial institutions, hedge funds, mutual funds and other institutional investors, who collectively manage over $200 billion in assets.

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