Merrill Lynch's stock mystified many last week, the AP notes. Many assumed its plunge was related to the fact that it changed the conversion terms on some of its LYONs, increasing from 14.1 shares to 16.5 shares. It also gave bondholders another couple of redemption dates in 2010 and 2014. All this likely will induce the bondholders from tendering back to the company, something they would have had the right to do this week. That keeps Merrill from having to shell out in the neighborhood of $2 billion in cash. But the move obviously is seen as dilutive, which helps explain the sell off. However, not all think this is the only thing at work--Portfolio magazine suggests that hedge funds that long convertibles and short the stock may have had something to do with it.  

For more:
- here's the AP background
- here's the Portfolio piece

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