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Chiron,
I don't think the MM expect approval of the POR in its current form. The shorts have been steadily covering for the past 8-10 weeks, including the most recent short report. If they expected the POR to be approved in its current form, they wouldn't care how many shorts they had outstanding.
Now in the short run, I tend to agree with you. This price has been artificially inflated, as it has several times in the past month or so. I believe it is rather how they are covering their shorts in a slow and steady fashion. I do expect the price to dip back down however, irregardless of the current status of the POR.
It's hard to oversell a stock when the MM keep shorting the hell out of it. If retail is selling, the MM will happily take our shares at these low prices to cover. If MM are selling, they don't mind a few more shares short.
I guess we can always hope we are oversold at some point though.
The MM don't want to drop this stock to subzero for at least a couple of reasons.
1.) If it was that low, we'd all be loading up our share count to at least double what we have, they don't want that to happen too much!
2.) They are actually making quite a bit of $$$$ running this thing back and forth, getting people reading charts and thinking one thing and then heading it in the opposite direction. So if you read the charts you will probably be more accurate if you do the opposite, since MM know there is a segment that do read charts.
3.) While it may be obvious to us who watch this chart there is insider trading, proving it with the hedge funds is going to be difficult enough, proving it on the larger pool of MM would be nearly impossible. No reason to make it even easier by driving the price clear down, at least not without some news to make folks edgy.
I hate saying this but more than anything else we all need a lot of patience for this stock. Something I'm usually short on.
Short covering is the name of the game. If you also follow WAMPQ you will have noticed that they have been steadily covering for the past 6 weeks. The U's nor any of the other classes are going anywhere until they have covered the P's - too tight of a float on them. Once they are covered my guess is that P's will catch back up with K's or much closer (right now ratio has recently been as low as 25 to 1, currently 30 to 1 instead of 40 to 1 face value would dictate.)
The K's and U's meanwhile there are more shares floating around, so they can cover much more easily.
More than charts and price movement, I believe this is the MM telegraphing their next move!
Just my opinion of course.
Would love to see their materiality calculation!
William,
I agree that Aurielus is the target to make things happen with the "failed" negotiations. However, I'm not convinced that the EC/SG didn't get exactly what they wanted in the settlement that wasn't.
The settlement discussions were in part to show the judge and the public (whom JPMC and FDIC will need to win over in the end) that equity is/should be in the money. It was also to set-up the HF.
You are spot on in regards to the a large pot of $$$$ from JPMC and/or FDIC is where it's really going to come from. And if JPMC kicks in a little cash and/or assumes TPS then they will need additional concessions, i.e. releases. They are mutually exclusive.
This is and has been all about posturing. BR must maintain his involvement or risk losing control of the bankruptcy proceedings. The recent settlement talks were designed to fail. That is why TPS was never involved. This is still a high stakes game of chicken and unfortunately we are all caught in the cross-fire.
I believe that SG is highly confident that they will shoot down this current POS POR. When they do, they will be much closer to taking over the drivers seat, if not fully in the drivers seat at that time, especially with the prospect of sending this case back to DC! That's the next piece of the pie once the confirmation hearings are complete.
This has absolutely nothing to do with the common shareholder of WAMUQ or WMI.
This is WMB the bank - and WMI owns 100% of the stock. Nobody is being let off the hook.
See my prior post for additional input.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=65074288
In response:
By doing this now, the debtor can.....?/???
a. appear more insolvent - emotional type of filing
b. debtor actually gets more value prior to reorganization from the write off of the stock loss - sign of S-talks?
c. doesnt common equity have to remain (old and cold) to get these tax write offs
As much as I wish that were a true statement, it is simply not.
The 4B deposit is already a part of the current settlement agreement. If JPM assumes TPS then any amount that reaches the preferred shares won't have to be shared with TPS all for P & K.
Now I firmly believe that more will arrive and JPM assuming TPS would be huge. However, if that is all that happens the P's are still sitting at 0-1% with the current POS POR.
Now, with FJR, real value for NOL's and . . . then we have something to talk about.
Well said William. The POR confirmation will show much closer to real value. I'll still be surprised if the confirmation moves ahead. If it does move forward I will certainly have a dose of apprehension, but I'm a believer that the real value will turn us to the positive for all classes.
Thanks lxu - I'll have to do a little reading this weekend now!
Can anyone tell me where to find the bankruptcy filings? I'm more familiar with Wamuq, but KCC didn't have the Borders document filings.
Thanks
What's driving the price back up?
Excellent point about Sargent. I unfortunately live in Seattle, so making it to the hearings are nearly impossible, good to know he doesn't have much of a poker face. However, listening to Sargent's rebuttal seemed like he was already content with what was unfolding.
I am in agreement with the idea that this motion did lay some ground work for future motions or leverage behind the scenes during the on-going negotiations. We'll probably never really know.
I also think the piece the EC was really after was the information about the trading wall of Aurelius. However, by asking for additional information that was certain to get the HF all riled up, their energies were focused on defeating that motion and the EC got what they wanted.
The other big piece is getting TPS in on the action. While their interests don't perfectly align, they are certainly a good ally and working together can only help.
It just keeps on getting better!
Now you sound jealous! I don't think your problem is the $32.55 bidder, but that there aren't any better bids out there.
Just a thought.
That's what I'm talking about, equity setting the value!
I'm with you XOM, I would love to read the PJS report - but somehow I don't think we'll ever get that chance.
Vics,
It is natural to have some fears, especially when we witness a drop in our portfolio value like we have today.
However, I don't think your fear is completely justified. The only thing the judge ruled was based on her questioning of counsel that the EC had everything. Sure the EC would have liked further emails and internal communication, but that wasn't completely necessary.
See my other post on the U board for a further discussion on the subject and little more perspective.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=64740663
I tend to think the reason the EC was not rewarded with further discovery today because what they were really seeking was further information regarding valuation. They wanted to get more information regarding the values the HFs were using and how they came to them.
Further information, like internal dialogs would make the IT allegations easier to prove - like who knew what - but beyond that they already have the key information that was provided to the HF and used for negotiation purposes. They have the trading records. The HF are already caught if the EC needs to pursue this path with all vigor.
Don't forget BR wouldn't really give the HF anything truly damaging to his cause, as he would lose control of that piece of information. This case is all about control.
I don't even think the IT is really the key issue, nor has it every really been. That is why the EC didn't pursue that avenue to begin with. With the allegations presenting themselves (thank your Nate) they have run with them. However, even now it is more about getting every little scrap of information available.
The EC will certainly use the IT as a weapon, don't get me wrong. However, this case has always and will always hinge on valuation. The EC has a good picture on valuation already. They are ready for battle at confirmation.
I still believe that the EC objection may not reach it to the public. The confirmation hearing itself is even less likely to begin. As was pointed out by another poster here today, POR 6.5 is DOA. The EC has been positioning themselves to get more power in these proceedings and that is happening. It may not always be obvious but it is there.
Don't forget the recent "failed" negotiations. I don’t think they were really a failure, only a way to insert more value in the discussion and give the EC more leverage if the confirmation becomes necessary. The EC never intended to accept the deal on the table; it was a puny offer as it was predicated on the GSA. While we want POR 6.5 to be done away with, the more important item is to destroy the GSA and get the FDIC and JPMC back to the bargaining table. Then we will be getting somewhere.
Hang tight everyone; this roller coaster has a few more twists and turns. When I saw the recent short report showing that shorts are back above 50M I knew nothing was imminent.
This is just my two cents worth. I'm with many folks here that get a little more anxious on days when the PPS takes a major drop. I have to remind myself to get away from my computer, get some fresh air, and then I can regain my perspective.
Listening to the proceedings today and not receiving everything the EC asked for was disappointing. However, this is only a little bump in the road and I'm sure not unexpected at SG. If this was really important you would have been more likely to have seen Susman attend personally. This wasn't a game changing hearing, save Susman for the really important hearings - and I don’t believe that Susman will be at the upcoming confirmation hearings either, if the current version makes it that far.
William,
This request, like the one previously submitted for Aurelius last week was made subsequent to the depositions. In this particular case the depositions took place Thursday & Friday June 23rd & 24th.
SG makes this point very clear that information from the depositions lead to the need to request the additional information. The information also seems like a no brainer to make the IT case.
I personally can't see Mary declining this request for two reasons. One, I believe she still wants to see a true global settlement (as do all on-lookers in positions of power). Two, the public is clamoring for someone to hang the financial crisis on and the HF are prime targets. If a couple of HF bite the dust that won't damage the financial markets in near the way taking down a major financial institution would.
Also, if SG isn't given enough time to conduct his investigation or reasonable requests are denied this only gives him more ammunition in a subsequent appeal. In a case such as this, whichever side loses will most certainly appeal. This is another reason a settlement is the best outcome for everyone. No judge likes to have their decisions appeals when possible.
Relax, we're in good hands! SG will have every opportunity to present his case, much as BR has had every opportunity to build his case.
vics, I agree with you to a point regarding the MM. They will play their games.
However, you must understand that if you have less than a full order (currently 200 shares) your offer doesn't show and only the specific MM who has your order (likely NITE if you use TD or Scottrade or another on-line discount broker) has to honor that price. They also don't have to shop your order to another broker if it is less than a full block order.
For this reason I usually enter my orders in at least full block orders and I usually try to enter more than that so I don't get a partial fill and then get ignored. I was actually able to buy a few shares this morning, I had a bid of 35.05 for 200 shares. They kicked me a lousy 14 shares again this morning and if the price drops back down that low on the bid again today the balance of my order won't show and I likely won't be filled.
You can get upset with the MMs but you are better off if you understand how they work. There is certainly plenty of room for them to play games. However, they still have some guidelines that they must follow.
I've found it doesn't hurt to call your broker and give them crap if you have an order entered and it is well below market and still not filled. If you need the cash I'd re-enter the order (maybe more like 30 to 35 - going clear down to 9 isn't necessary) and have your broker contact the MM and give them crap for not filling your order since shares are being traded above your asking price. At the end of the day the MMs have to keep the broker's happy or they will lose the business.
Well I can tell you who bought the shares! I would have preferred a complete fill though, instead of only 14 shares. We'll see if they give me any more before the day is over. They also had better not fill anyone below me or TD will be hearing from me. (Now that I don't have a full order any longer - I'm no longer on the bid, shows $35.25 instead of my $35.45)
On the news in Seattle this morning, some drove a cab into a Chase branch downtown. Pretty gnarly. Better pay up Chase, karma's a bitch!
It appears to me Aurelius just laid some ground work for JPM to contribute more money for the settlement and the public can view it as interest payments.
This is very good.
BR is throwing out his normal BS with his line "this caught us by surprise". I say this was a filing discussed with all parties to make it easier for JPM to contribute more to the settlement and still claim no wrong doing.
While I'd love to see JPM pinned to the wall, I just don't see that happening. And to obtain a real settlement, with at the very least $$ for all parties, JPM is going to need to come out of this looking good. If not, they have no incentive to settle and will just keep fighting.
Got some .095's earlier this morning!
Now my contrary argument to shorts covering is this:
If as I suspect, JPM themselves (as opposed to the main MM we all hate) are the primary seller of these short shares, they may be okay with a “small” loss on these shorts. They may not cover until after an announcement is made.
For arguments sake, if the common shareholders take 100% interest in NewCo, and the stated value remains near the $160M value currently being bantered about (I personally believe it is much more – even before the NOLs take on their true value) – and common shares run-up to say $1 – with shorts covering on the way up, this would cost JPM less than $40M. Compared to what they are making on the seized assets and what they would potentially pay for even the preferred shares, they really don’t have as much risk as it first appears.
Yes, I believe that JPM is going to be pitching in to help with the preferred shares. By keeping them really low a settlement will seem more palatable at less than full value. I have a few more thoughts on this but the important point is JPM has motivation to keep both preferred and common share values as low as possible until after the real settlement value is determined.
Again, this is just another possible scenario in my mind. I hope this one is closer to reality. Releasing this new settlement with at least some clarity will be a huge step forward. If the shorts (at least on the commons) don't plan to cover, this could actually be released anytime and the only hold-up is the behind the scenes negotiations.
I prefer this scenario!
William,
I agree with you in essence, and I'm quite hopeful that we will see this new equity friendly POR sooner than later. However, the June 17th deadline is only if Rosen and company are moving forward with POR7 at the July 5th hearing.
This deadline sounds much more firm than the earlier "7-10 days" Rosen gave us previously. However, this "deadline" was given at the request of TPS so they could know which hearing to prepare for, confirmation of POR6 or disclosure statement for POR7. I wouldn't be surprised at all if we see another status update on the docket for July 5th and no movement is made in court on either POR.
While I'm hopeful that everyone truly means that they want this wrapped up in the next couple of months, it is also quite possible that another delay can occur. I'm sure most of the settling parties do want this done expeditiously, but I don't think JPM is in any real hurry.
There is a reason that I say all this. I want this resolved favorably for equity as much as anyone, however, there is still the little detail of covering all the shorts. And I don't believe very many have covered yet, if any.
With all the shenanigans that have transpired thus far, and knowing who holds all these shorts, they won't let this run-away until they have covered. And 40M shorts are a lot of shares to buy back. I also don't think we'll see them buy them back slowly as time leads up to this next potential settlement date. If we as investors see 40M shorts turn into 30M shorts the lid is going to blow off this whole thing, because we'll know its close.
This is just my opinion.
Come on EC, let's get this thing done!!! Prove me wrong!
It's a panel discussion. It's common to have multiple different participants representing different perspectives.
I wouldn't read anything into it.
In other words your "real" ratio may also be stated as the "current" ratio. Correct?
How do you get 35 as the "real" ratio?
Are you assuming some different payout besides face value?
K's have a face of 25 and P's a face of 1,000. This yields a ratio of 40 by my math 1,000/25.
What's your actual ratio components?
For those who missed accounting 101 . . .
The customer deposit is a liability - and only a liability.
However, the corresponding cash that the bank is holding for the depositor is the asset.
In the banking world collecting deposits are a sign of size and health of a bank. The reason is because they pay little to no interest and can obviously put that money to work charging a higher interest rate on loans made. It's kind of like free money! If you are looking at the balance sheet of the bank you will see this deposit as a liability as it is money that has to repay based on the terms of the deposit (often a demand deposit).
Because deposits allow for great leverage the amount of "cheap" money a bank holds is a way of calculating value. However, the actual deposit is still a liability and the asset is either cash on hand, mortgages or other loans from the cash the bank received.
** See "run on the bank" for a better understanding of the deposit risks associated with this type of liability.
That's a negative!
It is a missed opportunity not an actual loss. You can only deduct income lost if you already paid taxes on the amount lost. i.e. you invested in madoff and you didn't get your money back, you deduct that loss assuming it is in a taxable account.
But good try! Creative thinking is always worth checking out.
The agreed upon order for discovery of the settlement noteholders - but depositions have been removed. I guess I didn't realize that part hadn't been granted.
However, Feb 22 is the deadline for all discovery!
I don't know that I'd say it changes your basis. It will prevent you from recognizing the loss on the current sale, and you will have a "carryover" basis to the repurchase from the prior sale.
So in short, it may change the basis on the new security, but really you are keeping the old basis and the new security is adjusted accordingly.
You are correct. The "wash sale rule" will catch you if you buy substantially the same security within 30 days.
However, if you would like the tax loss, I'd recommend selling your UQ and taking the loss. Then purchase WAMPQ or WAMKQ. If you prefer UQ's longterm switch back after 31 days, but if something happens in the meantime you'll likely do at least as well, if not better.
Good luck.
As for the tax implications:
If there is a share swap your stock basis will be equal to what you paid in the old shares and you would not recognize capital gains until you sold the shares received.
Thanks for your perspective Chiron (Jerle!)
If THJMW did somehow approve the POR, though inconceivable in my mind, it would be appealed, plain and simple.
The judge is not intimidated folks. She is following the law. She has not been fooled by Rosen (she hasn't ruled on the $4B summary judgement because she was asked not to, via a settlement offer.) The debtors via Rosen are in control. The judge can only rule on what is put before her. These lawyers all know how to make the law work for them. But in the end there has to be evidence to get a plan confirmed.
Patience is not something I am very good at, but that is what is required.
Next Friday should be fun! Hang tight everyone.
I agree the judge was narrowing in on the releases during the last two hours of the hearing.
However, I have a slightly different take on that. She is looking at releases in terms of not granting releasing for those who don't receive anything in the settlement (IMHO). And while I don't really expect her to approve this, there is a possibility she could, but only with modified releases.
Incomeplete releases will kill the settlement. She won't sign off on releases for equity because they are not receiving anything. And if equity isn't forced into accepting the waivers then the FDIC and JPM won't go along with the settlement. They need to have total release of all future damages.
I think this is still touch and go, but the releases may actually be the easy way out for her.
Additionally, she often asked questions to clarify positions. If/When she declines the POR she will address every angle and leave no wiggle room for the debtors. Thus, she has to be clear on every point.
Context for Judges joke:
Mr Arthur Steinberg said a couple of times, "people say I complain too much, but that is because there is much to complain about."
Then as he was finishing, the judge added her line:
"Just because you're paranoid, doesn't mean they're not out to get you."
Just hearing that line made listening today worth all the boring parts!
She said IF it passes next week the cost would be de minimus and the restriction for only a short period of time.
She also followed that with the statement that if it wasn't confirmed next week perserving another option was valid (or something like that.)