What are the risks of shorting Bear at $5?
- Thread starter himself
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That seems unlikely. If the equity is worthless without the JPM deal, then shareholders have a choice of getting $2 or getting $0 if they oppose the deal.The only rational reason to oppose the deal is if the stock is worth more than $2.
Also, if the bondholders are the only buyers and are going to vote the deal through, then every other investor would be selling like mad at $8-$8.50, and hedge funds would be shorting the crap out of it. Bond holders would only need to pay a little over $2 for it to be rational to sell all the equity to them in the event of JPM being the only thing on the table.
BSC trading at $8 and higher is a clear sign that someone believes the equity is worth >$2 and is prepared to back their view with over $1 billion.
A short squeeze or dead cat bounce could account for say a 50 or even 100% pop, but not a rally to FOUR TIMES the takeover price.
Bond Holders might be protecting their end of the deal. Paying-off any longs/shorts.
To them it is a lot more that $2 or $0
If the shareholders succeeded somehow the bond holders would/could be out 10's of billions.
And you are right about being able to short and hope that everything stays the same. Feel free
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if I had 10's of billions of bonds i would be willing to pay off the brave shorts and the disgruntled longs.
To them it is a lot more that $2 or $0
If the shareholders succeeded somehow the bond holders would/could be out 10's of billions.
And you are right about being able to short and hope that everything stays the same. Feel free
.if I had 10's of billions of bonds i would be willing to pay off the brave shorts and the disgruntled longs.
Quote from RAY:
Bond Holders might be protecting their end of the deal. Paying-off any longs/shorts.
To them it is a lot more that $2 or $0
If the shareholders succeeded somehow the bond holders would/could be out 10's of billions.
And you are right about being able to short and hope that everything stays the same. Feel free
if I had 10's of billions of bonds i would be willing to pay off the brave shorts and the disgruntled longs.
How many more posters are going to regurgitate this? Stop cribbing off websites and passing it off as your own insight - try thinking for yourself and you might actually make money instead of watching and then using after-the-fact explanations from journalists.
It makes no sense to pay $7-8 if the stock can only be worth $2 or $0. Paying $7-8 only makes sense for bondholders if someone else is also prepared to pay those prices. Who is that someone else? Either is is a bidder or short-covering. If the latter, the bond holders can just wait a few days and pay $2.
Yes I know, but the other poster (and 3 or 4 others who clearly read the website in question then regurgitated it on ET without accrediting the story, trying to pass it off as their own insight) said it was up because bond holders were buying to take control of the equity. Leaving aside the point that this means the equity *is worth* the price they are willing to pay, it clearly means that his proposition that the equity is worth only $2 or $0 is nonsense.