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I am working on putting something together that you can give to him to compare many of the current bankruptcy cases. I will post it on IHUB and on the blog when I am finished. It will take some time to put together and I am not sure what the final format will look like.
It is true that if the bonds are not paid out at face then the parties in interest beneath them on the payout structure will likely suffer some impairment. However, the price at which they trade is not necessarily representative of the price they would be paid out at in liquidation. In Chemtura’s case, the price is more a reflection of the market’s perception of the company’s ability to repay its debts, since they are not currently paying interest. If they were paying interest, price would also be a function of the coupon rate of interest that the instrument pays. To some extent that would be factored into the equation because the bonds are entitled to receive all missed coupon payments plus any other remedies afforded by the bond indenture. These other factors would serve to increase the total amount due and payable.
With Bonds in general, if doubt and uncertainty creep in, the price of the bond will decline and if market rates of interest move above the bond’s coupon rate the price will also decline to trade at a discount. In Chemtura’s case, as the price of the bonds move closer to face value, the market is saying that it is becoming incrementally more comfortable with the company’s ability to repay.
That's correct. They provide liquidity in some markets where it might not otherwise exist. In the case of Chemtura it is merely one source of liquidity. In some bankrupt stocks it is the only source liquidity. Those are the ones susceptible to and ripe for the pump and dump.
Clay, thanks for your charts on Chemtura. I have enjoyed following them and have found them to be quite useful.
Very nice position.
I bet we can collectively come up with one. I don't really have a DD sheet on this, I designed the Blogsite to be my living DD sheet. If anyone wants to post a suggestion for a top ten list, why not start the post with "Top 10:" and then list your suggestion. We can easily identify them and aggregate them into one document then see if the Mods will put it in the IBOX.
Chemtura Stock & Bond Price Summary 09/01/09
(CEMJQ.PK) closes the day at $0.76, (+$0.09 or +13.43%) with 3,200,905 shares traded. Chemtura is now trading with a market cap of $184.68 million based on 243 million outstanding shares. Book value per share (MRQ) is $1.31. Price/Book multiple is 0.58.
The June 2016 bonds (HTRA.GA) finished trading at $93.00 (+$4.00 or 4.49%). This marks a new post-petition high;
The July 2009 bonds (GLK.GA) finished trading at $88.00 (Even) on a small block trade. The last regular sized trade executed at $90.00, a new post-petition high.
The February 2026 bonds (CK.GE) finished trading at $67.00 (+$0.50 or 0.75%). This marks a new post-petition high.
Another day, another round of new highs for the bonds.
The main distinction between the 2026 bonds trading at a discount to the others is that they are not guaranteed by any of the subsidiaries, thus they are the sole responsibility of Chemtura Corp. The 2009 are issued by Great Lakes Chemical and guaranteed by Chemyura Corp. The 2016 are issued by Chemtura Corp. and guaranteed by some of the subsidiaries.
For detailed information on the guarantors of the bonds go to the blogsite linked below in my signature and click on "Bond Information" it is in the right hand pane under the "Chemtura Links" section.
What do bond holders know about expectations of a meaningful recovery? Think they are still playing the "bankruptcy bounce" like all of us uninformed penny flippers?
Stay thirsty my friends.
I believe they were canceled, but not for sure. Can't research it where I am. The example was to show where the industry was vs. Where it is now. The bk reference was merely to illustrate the difficulties the industry has faced. There are other chemical companies in bk now as well. The fate of each is not linked.
One of Chemtura's peers in the Chemical Industry, Solutia - (SOA) fell to as low as $1.04 back in March, it is now trading around $12.00. SOA, a former subsidiary and spinoff of Monsanto (Agricultural equivalent of Goldman Sachs) exited bankruptcy a few years ago.
Another peer, Ashland (ASH), who purchased Rogerson's previous turnaround project, Hercules, traded as low as $5.35 and has recovered nicely to about $35. Still kicking my self for selling my stake in Ashland several months ago. I got too impatient. The consolation prize was that I used those funds to buy a stake in Chemtura, so it wasn't a total loss ;)
Just goes to show how difficult an environment it has been for most if not all chemical companies in the last 12 months and where the indusrty stands relative to 5 months ago.
Actually, that $90 trade in the 2009 bonds was a dealer buying from a client so it is even more bullish. Based on that, I would expect the next trade (client buying from dealer) to execute at a higher price, all things being equal.
Appreciate your thoughts. Don't be such a stranger from now on.
I'd like to hear your thoughts on why we have explosions like we had at the end of last week on high volume and then follow it up with a low volume take down where it takes a long time to get filled at the ask price if it gets filled at all. Is this merely supply and demand or is something else afoot when this occurs?
Thanks for stopping by.
CEMJQ Monthly Share Volume Report August 2009
Check out the August activity for SBSH (Citigroup), DOMS (Domestic Securities) and STXG (StockCross) relative to their July activity and YTD activity.
http://www.otcbb.com/asp/tradeact_mv.asp?SearchBy=issue&Issue=CEMJQ&SortBy=volume&Month=8-1-2009&IMAGE1.x=21&IMAGE1.y=7
500k @$72... eom
I'm enjoying the view as well. Although, if a trip to Cabo is in order, we'll have to come down to sea level for that ;)
Bullish. 2009 overtakes the 2016 for the first time in the post-petition era. What was that again about expectation of recovery...
Couple of court docs uploaded tonight that concern the rejection of real estate leases. One is the old GLCC HQ in Indianapolis, IN and the other is a Biolab Haz-Mat Storage facility in Glendale, AZ. Total savings, if aproved, would amount to about $2.75 million.
You mean these guys...
"The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money."
http://www.rollingstone.com/politics/story/29127316/the_great_american_bubble_machine
The 2026 bonds have definitely come a long way. They are the true litmus test for measuring the markets expectations for a meaningful recovery for equity holders because they are the obligation of Chemtura Corp. alone as they are not guaranteed by any of Chemtura's subsidiaries. In that regard they represent the recovery expectations of the most exposed party in interest that stands in line in front of equity.
It was not long ago that the 2009 and 2016 bonds were at the same level as the 2026 is now. If the trend line continues as it has for the last several months, we could see a scenario develop where all three bond issuances approach face value and the equity could begin to reach the valuation levels of some of the members on the lower end of its peer group.
Once uncertainty is out of the equation, this company has the potential to posess one of the cleanest balance sheets in its industry, thnaks to the BK process. It will have a lot of valuable assets and plenty of revenue generating capacity, with more to come (TETRA Relationship).
GLTA
July 2009 bonds returned to their post BK high of $88.00. All three bonds are sitting at either their absolute highs or closing highs for the post bk era.
This is the third time over the past few months that I have tried to add shares on a trading day like today. When the price comes in as far as it has today it can take 15 to 20 minutes to get filled at the ask. It makes it especially difficult when the trading platform has a different bid/ask that what is reflected in the time and sales. Sometimes I just have to remember to be patient. Its the Heinz ketchup theory applied to stocks.
I'm trying to buy some shares but don't know what the true ask is. I'm chasing the Time & Sales entries. My B/A spread on ameritrade has been off for several stocks today.
I'm hitting the ask and not getting filled. Anyone want out?
Price explosions occur on high volume and retracements happen on low volume. As long as this trend continues, it presents opportunities in the short-term while we wait for the long-term payoff.
Welcome to the board. Congrats on your first post here. You're not a stranger to us now, so feel free to post more often. You're now among friends who have common goals and interests.
There have been some good debates this weekend on T/A and where it might take us from here. I have enjoyed reading them and thought I would chime in to further muddy the waters.
I am one who looks at stocks from three perspectives, Quantatative analysis (to locate a stock), fundamental analysis and technical analysis. I pay homage to, and have a deep respect for all three. I am the weakest on T/A but am trying to learn. I know enough to be dangerous to myself ;)
I believe that the T/A has worked well over the last several months but also believe that using prior support/resistance points from months or years before the BK filing may not work well, going forward, because you are talking about a completely different set of fundamentals with respect to the economy and the company. In addition, the shareholder base has turned over many times since then, so attempting to link current and prior market psychology to any particular price point will not have the same correlation, given the drastic changes. For the most part, the type of investor who purchased this stock since March 2009 is different from the ones that did so in the years/months leading up to the petition date.
One thing I will say to hedge my opinion is that I fully understand that there are many people out there with more knowledge, resources and financial wherewithal than myself, so one of the things I try to do is to gauge what other people are thinking and doing, then react accordingly. Even if I disagree with someone elses fundamental or T/A assessement, I have to respect it and evaluate it on its merits. It is rare that I will summarily dismiss someone elses opinion just because it differs from my own. I have learned a lot of valuable information and lessons by using this approach. If we spent as much time verifying and testing the opinions of others as we do dismissing them, we would all be better off.
GLTA
Nice to have you back.
Stop by the blogsite and cast your vote. I have put up a couple of polls on the main page below the stock quote.
http://chemturaresearch.blogspot.com/
Ray, You are one of several pairs of eyes and ears we have on the ground and I appreciate you checking in with us. You have made many valuable contributions to the board. Thanks for your time.
Hello, Ray. Nice to see you here. I hope things are going well.
Thanks for the link. I have read a few of his opinions from that link in the past and I find him to be fair and equitable. I am glad that he is presiding over our case.
Below is the top paragraph from the court document linked below (Doc # 1020 filed 08/27/09). Shows he is not into playing games or listening to a bunch of bickering back and forth. Basically he is saying to the Diacetyl litigants... the Bar Date is set, the Debtors have complied with all court rulings and don't bring that "noise" into my court room again.
"A telephonic hearing is not necessary. Debtors’ position, as set forth in this letter, conforms to Court’s
earlier rulings. Debtors are to send out and effect publication of bar date notice, with such modifications
as Debtors agreed to do after meet-and-confer conference, as soon as practical. There will be no further
briefing or debate with respect to these issues."
The Diacetyl Litigation will be interesting to follow in the coming weeks/months. It should be fairly contentious and from the language used in his response to the litigants continued requests for further concessions after he has made his ruling, it appears he is a bit annoyed. Tough to tell based on the written word, but it is what I am deducing from the tone.
http://www.kccllc.net/documents/0911233/0911233090827000000000006.pdf
So true. I can't wait to see the next round of SEC 13f-hr, N-Q and N-CSR forms for CEMJQ. I suspect there will be a number of "New Holding" and "Added More" entries on MFFAIS.
1.115 mil, 450k and 550k in a 13 minute span. My guess is that we will hear some news soon.
From Twitter: hedgefundinvestES: $CEMJQ (Chemtura) equity volume and price have spiked up. Something looks like it is brewing. Bankrupt equity, so warrants caution. $$
HFI has over 1600 followers so the word is getting out.
Looks like they needed to shake out a few shares to fill yet another 250k order at $0.78.
I think i'll follow the lead of the folks who hit the ask for 250k and 500k at $0.82. As long as we have that kind of activity they can play games with the bid/ask all they want and it will not shake out any of my shares.
2009 bond now at $88 up $2.00 to start the day.
Chemical Industry Price/Book Multiples 08/27/09
http://chemturaresearch.blogspot.com/2009/08/chemical-industry-pricebook-multiples.html
Chemtura Calendar of Events Updated 08/27/09
http://chemturaresearch.blogspot.com/2009/08/chemtura-calendar-of-events-updated_27.html
Congrats to you. You had the foresight, fortitude (intestinal) and financial wherewithal to load up in the $0.02 range, putting you in some pretty rare company. Enjoy the rewards that come with it.