Bond market or common shares market?
I guarantee that this kind of stupidity, were the common shares spike when they have no value, that are in bankruptcy, goes on all the time. Even when people explain the process to the muppets, some of the muppets still insist ‘there is a chance’. The more intelligent muppets remind you about American Airlines and how it recovered in bankruptcy without any understanding how that situation was different or similar to the current situation.
Almost every large bankruptcy in the past few years have the common shares spike up when the DIP financing gets announced, or an asset sale gets announced, or there is an extension of the deadline to file the reorg plan. The muppets think it is good news, especially the DIP financing, not understanding that the DIP has super priority ahead of the common shares plus all other liabilities.
While the common shares are running up, like they are going to survive, that is nothing more than the muppets piling into the shares. Even if you knew nothing about the company or the stock, but knew that bonds recover ahead of the common shares, you would know that the retail market is wrong because the bonds are still trading like they are going to lose most of their value, meaning the common shares are going to get nothing.
IF the common shares were really going to recover, all of the bond series would be trading near par (100). Instead, here, we see most of the bonds still trading with the expectation of large losses.
The people and institutions that trade in the bond markets actually take a look to understand if they are going to get their money back or not, where as trading in the common shares, especially with the muppets piling in, is more like being at a casino and playing the Keno lottery game than investing.
At least with BTUUQ, there has been no plan filed so one can understand how the muppets might think the common shares will recover. The truly unbelievable situations are with the companies that are in Chapter 11, the reorg plan has already been filed, and there are 8K reports from the company telling everyone that the common shares are going to be canceled; and the muppets STILL pile into the stock and cause the price to spike at times. Comment sections on some boards even show some people ‘holding on’ after a court has confirmed the plan and the ten days are running for an entry of an effective date. (After a court confirms a reorg plan, there is a time period that has to run in order to give an interested party a chance to appeal the plan. Once that time period is over, the court will enter an effective date. At that instant the plan takes effect. If the common shares are canceled under the plan, then trading stops and the shares are dead.)
God Bless the muppets, at least someone holding shares to see what was going on has a chance to recover some of their money by off loading them onto the muppets. I do wonder how and were any of the muppets ever have any money to invest.
Louis J. Desy Jr.
