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I don't have it in front of me but I believe the objection had to be received on the 4th. If so, I hope you overnighted it.
You left off the last paragraph from your link...
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Conclusion - And most importantly, bottom-lining it:
The max upside in this case for DIMEQ that would result from being classified as a Class 12 GUC claimant or an equitable lienholder is about $3.00 per LTW (versus today ~ 65 cents) before post-petition interest if the full $337 million reserve goes to the LTW Holders. If the federal judgment rate is applied to that award for 3.5 years it moves the recovery up to about $3.20. On the downside, if DIMEQ is deemed to be Equity and if the Debtor prevails in applying the improper conversion rate then the worst scenario based on Plan value would put the DIMEQ security between $0.07 and $0.10.
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At this moment, dimeq is trading at .085, exactly in the middle of his .07 to .10 estimate. Damn, he's good. And I should add he wrote the above article on 12/14/11.
Yanik, I admire your courage. I hold a lot already and have more cash on the sidelines begging to go in and play. But I'm not as sure as you. Either that, or I don't have your iron.
Wamuvoodoo, when the tentative numbers were released, the preferreds seemed to be a better buy than the commons at emergence. Did you rebalance your holdings to move more to the pref's? If not, why? Do you want to keep your holdings balanced?
Guys, keep in mind the big picture. Yesterday, the commons had a "likely" value of $0 at emergence, with the opportunity to sue in the future.
Today, the stock has a lower end value of, what, .10-.25 maybe? It's a guess until we see the asset list and NOL ownership. But the EC wouldn't have agreed to a settlement valuation of .01 a share. It's so close to 0.0, they would have sent it back to the judge with no deal. So I say .10-.25 is a reasonable guesstimate for now.
Here's my point. Holding at .06 when it had a lower end value of 0.0 was a risk. Holding at .096 when it has a lower end value of .10 has no risk. Even at .08, it has virtually no downside.
I don't get those rushing to sell at .096 and then talking the stock down, saying their calculations show blah blah blah. Whatever. It's a pretty transparent attempt to try to buy back in lower. Good luck with that. Just don't miss the train before it leaves the station while you're on the platform scratching your ass. After years of waiting, do you really want to chance missing the final rally to make an extra few percent?
Catz, I agree with you as well.
I should qualify what I said by adding that I do not plan to hold the commons to emergence and consider that too risky for the reasons you site. I'm a swing trader and plan to sell it on a dip if there is no settlement (and take the haircut) or sell on a pop if another settlement offer is made. The wamu commons are a bit riskier than I usually like but I consider this a calculated risk, short term. Maybe 2/3 chance it rises quite a bit (briefly) and 1/3 chance it falls back. Since it's usually considered poor form to make numerical predictions, I won't do so. But I have specific price ranges in mind and the upside pop would be significant.
To echo your point, even if a sweeter offer is made, the pref's and everybody else would line up to bitch about it and vow to stop it, sue everybody, the usual. Ultimately, unless the hedgies will give up a lot of money, precious little if any will waterfall down to the EC at emergence. The wildcard is if the EC could retain ownership of the massive tax loss which normally does go with the stock. But everyone wants that and it would have to be an agreed upon thing in the global settlement.
If the EC got all of it, it would have a net present value of perhaps $.75-$1.00/share to the commons in real terms, depending on the offer from another firm to absorb it. While I consider such an outcome unlikely, it remains possible. Even though I won't be holding the stock at that time, I kind of hope it happens for those wamuq holders who suffered through this soap opera for the last 3 years.
Catz, when looking at the numbers, the EC shouldn't get anything unless the hedgies voluntarily give them something, right? So what's their incentive? I see one biggie.
Judge Mary said the EC has colorable claims to sue the hedge funds after this whole affair. The way I see it, if the EC gets $0, there's about 100% chance they'll sue. If the hedgies want to avoid a lawsuit, therefore, they know they'll have to offer more than $0 to get that benefit.
I know they have deep pockets and in a long term fight they have the advantage, but that misses the point of a settlement. People don't settle just because they fear losing or lack the resources to fight. They usually settle if the settlement is cheaper than the litigation costs.
Therefore, it makes perfect sense to me that the hedgies throw the EC a bone. Doing this will also make the judge happier with them for trying. For these reasons, I've always thought a new, higher settlement offer was likely.
I know we want to analyze this case to death in a black and white, logical manner. But if this was a regular case, POR6 would have been approved and the EC would have gotten $0. But in defiance of precedence, it was not approved as you know. Therefore, a little psychology might show us the way on this one.
Doubt you'll agree with me on this. But I wanted to throw out a counterpoint.
Ah, that explains it. Well, here's hoping we both make some $$$. I'm raising up my coffee mug as if it were a beer... :)
WithCatz,
Most insightful post I've read on this board to date. Thank you for that. I am very curious how someone with your level of education and contract law knowledge has the time to post so regularly on a board like this. Whatever your reasons, you are providing a valuable service here.
Chiron, I agree with your analysis but not percentages.
In May, I would have. But after JMW didn't rubber stamp POR 6, that gave us clues to her thinking. If she was going to get tired and wanted the case over, that was the time to approve it. But she didn't. Idealistic after 2 yrs but tired after 2.5? Highly doubt it.
The real % are not 50-49-1 but 50-0-50. Either the thing gets rubber stamped as is (prefs and commons get nada) or it gets sent back. If it gets sent back, the prefs & commons will get something. I don't see such a minor adjustment to the waterfall that prefs get something while commons get nothing as likely.
But that does not mean holders of commons have a 50-50 chance of making money from here. While that's a good ratio long term, this thing will bob and weave between now and then. Sorry, not willing to share my near term price predictions. But the chances of a nice pop or two before emergence are much higher than 50-50. That is, if you're not afraid to step out and back in once or twice.
Here's the link regarding my $10.61 reference:
http://seekingalpha.com/article/233723-mirant-many-questions-one-conclusion-this-stock-is-undervalued
Yep, either to regroup or, hopefully, have the weekend to offer another settlement as we discussed yesterday. If so, those not holding now might be too late to buy back in on Mon.
One other thing, I really liked the mirant example in court today. Stock went from .01 to $2-$3 at emergence. The creditors also claimed there was nothing of value with mirant at the time and tried to liquidate it. Some things never change. Judge didn't buy it back then and the commons got a home run. Maybe we'll see a repeat with wamuq?
By the way, I'll bet those who sold mirant at .11 were kinda depressed when they saw it trading a year later at $3. (Update: on 11/1/10 Mirant (MIR) was trading at $10.61/share when it merged with RRI Energy. Now that would be a happy ending.)
This is my hope. But 50-50 it's just to get their lies straight. :)
Hey Voodoo, don't know if you listened in to the trial today. I haven't yet but will later on and have read Ilene's tweets.
Question, what do you think the odds are that the EC will get another settlement offer? 75%?
I used to think even more so, but I can't figure out if the judge is on the EC's side, seeing how the hedgies have acted, or going through the motions to avoid an appeal -- giving the EC a full hearing but will come down with a standard verdict.
Ilene is there and told me she thinks the judge is pissed off at the hedgie's antics. But I'm not fully convinced. The judge seems super smart and might just be going through the motions for the benefit of the shareholders. What do you think???
Agreed. I'm a bit overweight in the commons at the moment but I have a very good feeling about the stock in the SHORT TERM. Holding the commons to emergence is a different matter altogether.
Thanks WC. I was not aware TPS owned most of the prefs.
Actually, that makes a settlement MORE likely in my opinion; the hedges only have to sway one large voting block rather than a hundred little blocks.
You're 100% right about B law without a settlement. But with a settlement, anything can happen.
Not sure if you'll share this, and without mentioning any numbers, are you holding any commons at the moment or just down with the struggle? :)
WC, even tho both are in the same class, the pref's are supposed to be paid in full before commons get any $. While the prefs can voluntarily agree to take less than 100% and give the commons some to move a settlement along, they don't have to.
Many think the prefs blew an opportunity to get this done faster, get more money in total from the hedges, and, yes, agree to share some with the commons. But they chose to fight sharing any. And so here we are with the EC moving forward with the depos.
I think it's possible the hedges are negotiating with the prefs directly as we speak to get them on board with a new settlement in which they get more $. But that's mere speculation on my part. Clearly, the hedges have something to hide or they would not have made the settlement offer in the first place.
Is this how you see where we're at, more or less, or am I off base here?
Ilenes, very interesting that you think the extra doc requests were something of a smokescreen and not necessary to fill in some blanks.
If the EC has what it needs to prove its case, all that's required is patience.
The big question is, does the EC have enough? :)
Hey ilenes, thanks a million for the tweets! Felt like I was in there with you...
Were you personally surprised the judge denied the EC the right to more documents? While I shouldn't be surprised in that judges don't like fishing expeditions, she seemed really open to the EC subpoenaing docs from the hedge funds earlier as discovery. Did something change in your opinion or am I misreading that?
Also, do you feel the EC might have enough docs in its stash to prove probable cause enough to move forward against the hedge funds or not at this point? Obviously, this is a gut thing on your part. Perhaps you noticed if the hedge funds seemed confident and the EC worried at the ruling today or not, etc.
Can someone knowledgeable please shed some light on what was said in the court to affect the price this way? (I'm at work at the moment and can't listen in.) While they're all crooks and this is BS is interesting commentary, it's not very helpful with the decision making process...
Thanks DanBB and Catz for the courtcall info. Can you also advise everybody what call-in bridge provider you use and the cost for all of this? Thanks!
DanBB, thanks for offering us your pw. Too bad the sound cut out for the last half of the call... Was the problem on your end or the courts?
Also, for those of us who are open to paying our own way to listen directly, how would we go about signing up and how much does it cost? Thanks.
Even money between speculators/short covering seeing the bond news versus a leak of a big announcement this weekend. Personally, I sold 60% at .1698 today and am holding the balance for now. Don't worry guys. I'm with you all up to $1. Just profiting on the waves as we go... :) Enjoy the weekend everybody. Great week for longs.
Thanks hurtszz. Doubt I got thru to anyone yesterday, but at least we made some $$$ huh?
I agree with your analysis completely. I listened to the conference call and nothing has changed. It's a standard threat to keep the process moving. Any chance the equity committee will go for $0 rather than the deal offered by the hedgies of $1bil, plus or minus?
And even if they can't agree by the 17th and he resubmits plan 6 giving the commons nothing, he already tried doing that before and the judge rejected it, remember? So if he submits the same plan that was already rejected, what are the odds it will be approved? (Hint: not good.)
This is emotional selling which correlates with the emotional buying that took it to .24. The current equilibrium price is .14 plus or minus .01 in my humble opinion. It's simply being oversold on the downside (panic selling) the same way is was overbought on the upside (euphoric buying). Feel free to follow the herd if you want, but you won't make any money that way.
For those who liked it at .10 on the way up, this is a buying opportunity. I'm all in as of today with my high risk money. This is still a gamble. But I like my odds for all the various reasons discussed at great length on this board over the last month.
If a draft of plan 7 is said to be likely (or actually done) by 6/17, next stop is .36ish.
Hey Uzualsuzpect, can you tell me the latest dates we should be concerned with regarding final appeals, the stock possibly halting from trading, etc? Thanks!
Anyone have the latest dates we should be concerned with regarding final appeals, possibly halting the stock, etc?
My apologies if this has been posted recently. I reviewed the last three pgs and couldn't find anything after the Mar court date and April conf call. Thanks.
Superfly, I like your posts. You do your homework, which is rare these days. Question, do you have any insight to the commons cancellation date or possible outcome of this--reorg vs liquidation? Thanks!
If the SEC didn't eminent domain the stock out from under us, I was willing to hold as long as necessary. Never seen that 12J ruling before. Looked it up. Unbelievably rare. Other bankrupt banks fighting the FDIC such as wamu have not had such a ruling issued. Maybe the SEC under Obama is being more aggressive? Must say, not a fan of this particular ruling. Private property rights anyone?
Anyway, I was willing to hang in there for an extra couple of weeks after the ruling. But with the prospect of a 100% loss hanging over this stock like the sword of damocles, it made holding it untenable.
Oh well, time to move on. I just hope the SEC doesn't follow me to my next stock. (ha ha)
Best of luck everyone!
To let you guys know, I just sold my position. Super low volume made me think it might not have enough energy to push back up. Even low sell volume requires SOME buy volume.
This thing could still hit .02 again or more for those of you still holding. It's just that the risk reward nexus shifted in my mind such that I think there are safer plays elsewhere.
CdoubleU, yes, that's good news and completely expected.
Last week, sell volume was high while buy volume was low. From now on, it will be the opposite. Everyone who wanted to sell, sold last week. No one wanted to buy last week except for me and a few crazy people.
Seriously, I knew it would have been safer to buy in today rather than last Friday. But I also knew I could fill my order at .011 on Fri but probably pay more like .015 this week. And that's what happened. I got my entire order filled on Fri and today the ask spent most of the day at .015. That could change. And for those of you with orders waiting at .01, I hope you get it on a dip.
But the problem is, sell volume is now almost non existent. Plus, this stock is cheap. (Not a good value, just cheap.) Add the two together, and small buys can move this up fast. Think about it. If just 5 people worldwide decide to put in $5K, that would be about 1.5M shares in buy orders. At these low volume levels, that should push the stock up to .02 instantly. And .02 would get peoples attention and could create another buying wave up to .025 maybe.
But it's very premature to call such a move at this point. First, we'll need to see a bid .015, ask of .016. Then I might make such a call as possible or even likely. But not yet.
Reloading at .01. I had an order sitting patiently at .008 just in case. I was hoping it would drop down a bit more, but there seems to be quite the roadblock at .01. I moved it up to .011. Got about 500K. Hoping to get another 500K at the open tomorrow. Even if it drops down to .008 by Fri aft, I'm happy at .01.
If anyone is curious, my play on this is .01-.02. Maybe .025. Will know more over the next couple of weeks. Personally, I don't think it's wise to hold this until Nov 18. If it's still chugging along, it might pop dramatically. But that seems a bit too risky to me at this point. I'm a simple guy. A quick 100% on two or three go arounds and then move on. :)
I carefully read the 8k. It says the SEC has the right (but not obligation) to halt trading and/or revoke the shares at anytime. I noticed the ruling was signed and approved on 9/20 with the 8k being filed on 9/22. It's now 9/28 and the thing traded all day again.
The 8K made it sound like the shares were to halt trading immediately. The 9/23 sell-off was therefore quite understandable. But it did not halt yet. A week has already gone by. Will it last two weeks? A month? 6 months?
But I do remember reading all these articles demanding that the old GM stock be canceled immediately because "idiots" kept trading it. Well, here we are, 18 months later, and it still trades everyday under it's Q symbol of mtlqq.
So what's my point? Suppose this thing does play for another 3-6 months? None of us are looking for a 5 yr play here. I feel like I can read this stock pretty well at this point and am still going to watch it for signs of life. All I know is I rode it up from .015 to .03 the last time it was pronounced dead and I have this feeling that, though given a death sentence, this old girl might have another trick up her sleeve yet.
Thanks for your analysis bk. Very helpful! I guess the big question that remains in the short term then is whether we'll see another run up to .07 or a slow bleed back down to .01. Care to make a prediction? 70% .07 versus 30% .01? If you guess right, and we all make money, I'll vote we officially change your screen name to stock guru--lol.
bkstocks08, two questions for you.
First, assume for a moment there had been no pullback today and the stock stayed sideways at .0335 all day, what would you have called the top at in that case over the next month? .05? .10? And if so, why?
Second, it did have a big pullback as you pointed out. But if it stabilizes at .02-.03 over the next week or two, what do you think would be a reasonable high we could look for over the next 30 days or so?
Sorry for all the q's! Trying to learn a bit from the more experienced traders such as yourself.
Jestiron, fascinating article you posted! The fact that the fdic just lost a ruling against cbcgq colonial bancgroup on wed, should bode well for wamuq stockholders. Don't know if we'll see $1 as some have speculated, but even .75 again would work for me!
You also got me thinking, could cbcgq possibly follow a similar trajectory as wamuq--just that it filed B a year later? If wamuq bottomed at .02 then hit .75, could cbcgq hit .25-.35 if it bottomed at about .01? Don't know. But tantalizing prospect. Adding to my watchlist now...