Convertible bonds have two outcomes, one is that they are converted into stocks during the conversion period, and the other is that the company withdraws the convertible bonds.

Major shareholders holding convertible bonds ultimately choose one of the above two situations.

Assuming that the major shareholder reduces its convertible bonds by a large amount, there is no value in discussing a small reduction. For example, if it reduces its holdings of convertible bonds by 10,000 yuan, there is no need to pay attention, so we only discuss a large reduction.

If you choose to convert to stocks, on the one hand it will increase the shareholding ratio, and on the other hand it will also affect the capital turnover of the major shareholders themselves.

Major shareholders may not be particularly confident in the company's prospects and may choose to sell convertible bonds to do other things, or they may really need to transfer funds to sell convertible bonds.

If the major shareholder chooses to hold the convertible bonds to maturity and redeem them from other companies.

This is a huge loss for major shareholders because the interest on convertible bonds is equivalent to the interest on demand deposits.

At the beginning, major shareholders' subscription of convertible bonds was also a promotional tool.

After the convertible bonds are issued, they naturally need to find opportunities to sell.

The motivation for major shareholders to reduce their holdings of convertible bonds must be arbitrage behavior. The logical analysis behind it is of course optimistic, which will lead to a crisis of confidence among other credit holders, causing short-term negative effects and causing the price of convertible bonds to fall.

In the long run, the reduction of major shareholders' holdings has transformed from the dual identity of creditors and debtors to the single identity of debtor.

If convertible bonds dilute later-stage equity, it is not conducive to the recovery of stock prices of listed companies, and it is not conducive to convertible bonds; unless the market concept is greatly conducive to the rise of stocks, the negative side will outweigh the profits, and such convertible bonds can only be regarded as pure bonds.

There are certain returns that investors are required to avoid.

(1) If it is purely ordinary investment behavior, it is neutral.

Because major shareholders may simply feel that the company's convertible bond price may fall when reducing convertible bonds, the reduction is to lock in income in a timely manner. This is a pure investment behavior. This kind of trading behavior occurs in the market every day and is relatively neutral;

Of course, there may be better investment projects that require capital and less cash.

Of course, since major shareholders know the company's actual operating conditions better than ordinary investors, the major shareholder's shareholding reduction may also be due to the company's poor management, knowing that there are potential risks in the company's operations, and avoiding risks by reducing its shareholdings.

If so, the reduction of holdings by large shareholders is negative, and we should note that the behavior of large shareholders is noteworthy because they have more information about the company.