ENE is now HIGH risk... the big money has been made swinging the short from the initiation of the regulatory difficulties. Given DYNs rejection of ENE, ENE becomes a prime candidate for Chapter 11. I wouldn't touch it, given yesterday's DYN rejection.
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
ENE-thoughts
- Thread starter aura0663
- Start date
ENE should have some interesting action today since they're getting booted from the S&P500. The index funds have to exit their positions at the end of the day (Thur Nov 29th) so its less likely (I'm guessing) to be halted today. Their business it kaput and there is no way to pay all the notes accelerated by their debt dowgrades so bankruptcy is a certainty. Common shareholders will be left with stock certificates only.
Don't mistake massive short covering with new buyers. This puppy hit $10+ about 2 weeks ago and was > $35 as recently as mid September. I'm sure some big money that's knowledgeable about ENE's business situation has been riding this thing down and may be covering though it may not even be necessary.
A friend of mine who works for PCG (PG&E) told me weeks ago that they had had been wary of Enron for some time and limited their trading with them so it was (I think) fairly widely known that their core business had deteriorated.
I need to talk to that friend a bit more often!
Don't mistake massive short covering with new buyers. This puppy hit $10+ about 2 weeks ago and was > $35 as recently as mid September. I'm sure some big money that's knowledgeable about ENE's business situation has been riding this thing down and may be covering though it may not even be necessary.
A friend of mine who works for PCG (PG&E) told me weeks ago that they had had been wary of Enron for some time and limited their trading with them so it was (I think) fairly widely known that their core business had deteriorated.
I need to talk to that friend a bit more often!
Being a short term player, me and praetorian2(HK in the room) traded ENE, I got a small quick profit and will certainly watch it today, remember, before it goes chp. 11, once the shorts cover, that will trigger the upside, so I see 50% bounce is very doable in 2 days. Read the tape (L2+T&S) to decide the entry, throw 5k as the probe, add when you right, unload before you wrong, tighten your stop and use isld... Oops, too much TRADE secrets hehe
Good Luck
Good Luck
Enron breaks down the risk components (production, transport, storage, etc.). of the commodities that they sell. They are a producer and market maker in one, hence giving them a huge advantage. There is also a lot of financial leverage that happens in the background, where they have production advantage via economics of size.
This is covers the basic but doesn't talk about the component risk elements nor the financial leverage:
<A HREF="http://www.zdnet.com/ecommerce/stories/main/0,10475,2799242-2,00.html" target="_blank">http://www.zdnet.com/ecommerce/stories/main/0,10475,2799242-2,00.html</A>
From the (preliminary) looks of things, it looks like another classic case of overleverage. Your risk model says you're totally hedge but one wrong assumption in your model and it comes crashing down on you with all that leverage. I see LTCM written all over this, except no government bailout this time.
This is covers the basic but doesn't talk about the component risk elements nor the financial leverage:
<A HREF="http://www.zdnet.com/ecommerce/stories/main/0,10475,2799242-2,00.html" target="_blank">http://www.zdnet.com/ecommerce/stories/main/0,10475,2799242-2,00.html</A>
From the (preliminary) looks of things, it looks like another classic case of overleverage. Your risk model says you're totally hedge but one wrong assumption in your model and it comes crashing down on you with all that leverage. I see LTCM written all over this, except no government bailout this time.