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Re: the cork post# 1485

Saturday, 09/11/2010 1:02:02 AM

Saturday, September 11, 2010 1:02:02 AM

Post# of 3460
Cork, I hear you. I never got involved in ABWTQ but I got burned by the depressed valuations and other greedy maneuvers of the players involved in Chemtura and Tronox. I can't begin to tell you how many funds and other professional money managers that I either talked to or shared emails with trying to find people to tell me I was wrong on those names. I try and take a different approach to investing than most of the other Ihubbers who only want to silence the naysayers. In my case, I go looking for them to test my own convictions. With Chemtura and Tronox both, the number of funds that saw value in the equity by far exceeded those that saw no value on the equity side.

In the case of Tronox, aside from the financial advisors to the creditors committee, I had trouble finding anyone who saw an equity zeroing POR coming. In fact if you watched the bond markets, they weren't expecting what happened either. In the end, the market, and more importantly, I personally misjudged the EPA's appetite for coming back to the negotiating table and trying to steal cash that should have been owed to them by Anadarko-Kerr McGee. Tha BP oil spill in the Gulf cost a lot of people money, including equity and debtholders of Tronox. Given that the creditors are being paid in full and that the EPA is receiving an additional $155 million vs. the original plan support agreement from 2009 it just goes to show how much value (almost $4 per share) would/could have flowed into equity's hands had the government not stepped in and siphoned off $270 million in distributable cash.

In the case of Chemtura, if it wasn't enough to have the Debtors and the creditors trying to screw equity with depressed valuations it got worse when the funds comprising the equity committee decided they wanted to get greedy too and gift themselves about 75% of Newco equity in their plan that wasn't even fully funded. Talk about complete boneheads. Basically what they did was to walk up to an adversary and ask them for a favor while insulting them and then walking away wondering why the transaction didn't go their way. I think the hedgefund guys on that EC are very good with numbers but have the proverbial "two left feet" when it comes to navigating through a chapter 11 proceeding on the equity side. There are few walking the earth who can pull it off, and I have learned that those guys are not among them.

I could go on and on listing other could have beens and might be's but the bottom line for all in the audience is that no matter how smart you are and no matter how big of a slam dunk it looks like, ALWAYS expect the unexpected and NEVER underestimate the greed of others. Also, before committing too much capital, make sure you know how the Judge has ruled in the past and which way he leans because that is huge. Most people don't pay attention to it but the Judge carries a very big stick and it gets even bigger in the endgame.

GLTA

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