Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Tesla ranks last on initial quality - JD Power
https://www.theverge.com/2020/6/25/21302804/tesla-ranks-last-on-influential-jd-power-quality-survey
[Disclosure: I am short TSLA]
Puts don't excite. Too expensive and time limited
But to each his own and GLTY...!
Can't get short, don't want to be long
So... nothing to discuss!
SO they warn of a stock-wipeout and you buy??
Barrons: "When markets get volatile" by Al Root
Hertz Is Bankrupt, but It Might Sell Stock Anyway. Tread Carefully.
By Al Root
June 12, 2020 11:11 am ET
When markets get volatile, strange things happens. Hertz is the latest example of that phenomenon.
Hertz stock (ticker: HTZ) shot up about 50% in early Friday trading to roughly $3 a share. Reports that the company might sell $1 billion in fresh equity to investors is boosting sentiment, but there’s a catch: Hertz just filed for bankruptcy protection.
A bankrupt company selling stock to investors is as strange as oil prices going negative, which they did in late April. (Back then, commodity traders had to literally pay for someone to take oil futures contracts off their hands, but oil has since rebounded.)
It’s very rare for a company who is seeking bankruptcy protection to sell new equity, and might even be unprecedented (though we can’t be sure). Typically, bankruptcy means stockholders get wiped out and debtholders end up owning the new, reorganized company that emerges from a so-called chapter 11 filing. And even then, bondholders typically get cents on the dollar when a company goes bust.
Hertz, for its part, is a victim of the travel declines wrought by the coronavirus pandemic. The company has a market value of about $300 million, down roughly 80% year to date. What’s more, the company has more than $20 billion in debt on its books as of the end of the first quarter. A debt-to-equity mix of about 67-to-1 isn’t healthy. It’s what led, in part, to the bankruptcy filing.
Rental car companies such as Hertz are a little complicated because a lot of the debt is tied up in the cars they own. Hertz—just like many Americans—purchases cars using financing. That makes rental car companies very sensitive to used car prices as well. Used car prices plummeted in April, but bounced back in May.
Does the rebound in Hertz stock, or the equity sale, mean there is an opportunity in the shares?
Anything is possible, but you might not want to have “anything is possible” as an investment philosophy. Barron’s wouldn’t recommend shares. The odds of the stock being worth anything are low. Famous investor Carl Icahn, for instance, sold all his Hertz stock after the bankruptcy filing—he didn’t see a comeback for the company.
The sale of stock, if the company pulls it off, amounts to investors buying a huge amount of risky options to trade with one another for a few weeks. Those nonstandard stock options will likely be worthless in the long run.
There examples of stocks that emerged from bankruptcy worth something. In those instances, the debtholders, essentially, got paid back in full, and there was still money left over for the shareholders. It’s rare, and investing in special situations like those usually requires special expertise. Most investors aren’t familiar with all the ins and outs of bankruptcy law.
So please tread carefully.
To Barron’s, buying bankrupt stocks is more like gambling than stock investing. And when playing poker, the adage goes: If you don’t know who the sucker at the table is, it might be you.
LINK: Link to Article [paywall]
H/T: Dino on Yahoo board
Which broker, Master? Mine won't lend me the shares!
Buddy, can you spare a share for shorting?
I just need it to borrow it for a day or two...
Darn, $2.90 now... Hate that
1bn share news didn't cause shock and awe that I thought...
Would like to get back in at $3.10 on short side...
But now no shares to borrow! :(
Disclosure: no position right now
I am no longer shorting, I'm "sitting on hands"!
This is bullish enough that I just covered my short in the after market
First saw it on Yahoo board. Chris, thanks so much for the link to WSJ that confirms it.
Gives the RH crowd the chance to put their money where their mouth is and, potentially, SAVE THIS AMERICAN ICON!!
Traders to Noobs: You might want to sell now, before you lose ALL your money
Noobs to Traders: Noooo, leave me alone! I think there's still a chance!
Traders: OK, we'll wait
Young men and women of courage and determination are buying!
Misplaced courage and determination, but still...
LONGS showing great resilience - I SALUTE YOU!
Nearly made it above yesterday's close!
...but I am still SHORT
...and it is STILL TIME TO GET OUT
HTZ trading $1.87 in the pre-market (nm)
FIND OUT HOW Robinhood MAKES MONEY...
Good old Robinhood, so kind to new investors!
No fees, easy interface...
Here's an interesting fact though. I backed out the annualized HTB (Hard to borrow) fees Schwab is charging me to 117% of the position (!)
So while the LONGS at Robinhood are taking it in the shorts (apparel), RH could be making a killing out of the HTB fees! After all, the more RH investors hold HTZ, the more HTZ Robinhood has to lend out to SHORTS (traders)...
I THINK WE SHOULD BE TOLD!!
Disclosure: I am short at $4.04 ( but given the HTB fees, no - I won't be waiting for zero!)
Being short means owning negative shares...
Or "owing stock". Allows a trader to profit from stock price fallls.
See also here -- What is short selling?
Kind regards
Iain R
Looks like the music has stopped...
Earlier than I thought...
Maybe some limit orders at 3 could give a brief respite to LONGS
BUT IT'S TIME TO GET OUT
Disclosure: I am short at $4.04
[accidental repost - please ignore]
The Bankruptcy WON'T be withdrawn - here's why...
Even if it's possible to withdraw the bankruptcy, this requires that the company be solvent - i.e. Assets greater than debts.
The data we have says that Hertz is not solvent.
Debts are trading at less than 100% of value, in fact as little as 40c on the dollar as per Dow Jones/Marketwatch.com (see paragraph 8).
This means that the market believes that there will not be enough money to pay the lenders back - they are expected to get back only 40% of what they loaned. (Note: stockholders usually receive money only after the lenders get all their money, so this implies there will be no value in HTZ stock.)
Also, Hertz spent 4 weeks between April 23 and May 22 trying to restructure itself. But due to the low value of the company and its high debts it was not possible then and it is not possible now, as evidenced by the 40c value of the debt.
DISCLOSURE : I am short at $4.04
Kind regards
Iain R
THE FED WON'T BAILOUT HTZ - here's why...
The Fed will not bail out Hertz. That's just fact. It can't bail out any insolvent company since 1933 and, since 2015, it cannot bail out any company in an "ad-hoc" bailout - per reuters
Now, the Treasury, being part of the Executive branch, can do whatever it wants. It could, for example, help reorganize Hertz, the way it did with GM and Chrysler in 2009. However, as in the case of the automakers reorgs, existing stockholders would likely be wiped out. USA-Today has a good summary of how old GM (they got nothing) and new GM stockholders fared. The stock you are buying now is "old HTZ", new HTZ stock won't be sold till after the reorganization is completed.
Likely the stock price will head back to $1 or so in a few days, and then down to about zero at or after the point it is delisted. There might be some ups among the downs, but eventually "the music will stop", by which I mean long-side speculators will decide to take profits or cut losses, and without their demand, the stock price will fall, as it has no ostensible potential to generate cash flows.
DISCLOSURE: Yes, I am SHORT at $4.04 from this morning
Kind regards,
Iain R
I salute you, LONGS! ...you are putting up a heck of a fight...
Yours truly,
THE EVIL SHORTS xox