Macroni - MONI, any idea on this one.
Chapter 7 or 11 ??
Chapter 7 or 11 ??
Bankruptcy Plays
- Thread starter rtharp
- Start date
Was CQB a bankruptcy play?
If it was, is it the poster child stock for this thread?
If it was, is it the poster child stock for this thread?
I would think KM would be the better pick because it plans to reject its costly leases and a whole slew of other obligations where it can, the goal being to survive and emerge. I'd liken EXDS more to Mobilmedia where it seemed pretty clear that the company had no possibility of surviving but had valuable assets that could be acquired by a suitor (Arch). Problem in these later types is the mechanism whereby the assets are transferrred seems to involve the cancellation of shares, issuance of new shares, putting shares into the formaldehyde, etc.. meaning equity security holders get nothing.
So I guess I'd have some concerns with say the dot.bombs more than with a bricks & mortar.
I'd consider hiring a service that monitors these cases if I were to try one again. They follow the court pleadings and the monthly reports the co. has to file with the trustees office. It's almost like an expedited earnings reporting schedule that the public can view.
For those who study fundamental analysis, try a search for Bankruptcy Predictor Model, a fascinating closed thread over at Silicon Investor.
Geo.
So I guess I'd have some concerns with say the dot.bombs more than with a bricks & mortar.
I'd consider hiring a service that monitors these cases if I were to try one again. They follow the court pleadings and the monthly reports the co. has to file with the trustees office. It's almost like an expedited earnings reporting schedule that the public can view.
For those who study fundamental analysis, try a search for Bankruptcy Predictor Model, a fascinating closed thread over at Silicon Investor.
Geo.
but hey, why mess with bankruptcy plays that offer a lousy hundredfold gain, when you can pick up a lotto ticket at the corner store that offers a fifty million fold gain! So what if the odds are on par with Britney Spears becoming President of the United States...
in all seriousness, when you consider the mathematical probability of winning, you wind up with a profit expectation lower than the average run of the mill daytrade:
potential 100 to 1 gain X laughable 0.5% probability of winning = better off doing something else.
before getting excited about bankruptcy plays that popped, does anyone have stats on the hundreds or thousands of b'ruptcy plays that were dead as a doornail? If you look at winners only your sample is worse than useless.
irrational hope: just say no.
i can't say i'm a bankruptcy expert. but I have seen quite a few dollar and penny stocks and the majority of them just simply disappear or remain dead for a long time. on occasion a few have resurfaced and made big comebacks and a few others have given some gains. if you take away all the BS stocks, those that have NO revenues, and we all know what they are ... if you don't, well you should, there still remains many companies to look at. so here is the problem:
1) there are still too many companies to filter and watch.
2) you can't invest a lot of money in a few plays because you lock up capital and the risk of going to zero is too high (zero or falling and never coming back break even and sitting there for ages, same thing)
3) traders need stocks that move otherwise they fall asleep. no better way to fall asleep than bankruptcy plays.
4) when the market stages comebacks, these stocks don't always follow. actually some fall and that creates frustrations.
So, maybe once in a while when you hear about a company you know is having trouble and you beleive it will have a chance to come back from your purchase price and even better, come back for real, then in my opinion it makes sense to buy it. Otherwise the Risk-Effort-Frustration/Reward isn't worth the risk. Better buy loto tickets.
I would like some feedback on the above, how other traders have tackled the penny stocks and bankruptcy plays.
1) there are still too many companies to filter and watch.
2) you can't invest a lot of money in a few plays because you lock up capital and the risk of going to zero is too high (zero or falling and never coming back break even and sitting there for ages, same thing)
3) traders need stocks that move otherwise they fall asleep. no better way to fall asleep than bankruptcy plays.
4) when the market stages comebacks, these stocks don't always follow. actually some fall and that creates frustrations.
So, maybe once in a while when you hear about a company you know is having trouble and you beleive it will have a chance to come back from your purchase price and even better, come back for real, then in my opinion it makes sense to buy it. Otherwise the Risk-Effort-Frustration/Reward isn't worth the risk. Better buy loto tickets.
I would like some feedback on the above, how other traders have tackled the penny stocks and bankruptcy plays.
