GMX Resources (Preferred) (fka GMXPQ)

[mrholty]

Chevy-

Do you know of any places where one can short penny stocks? My broker doesn't allow it but I've been told there are some that do?

The reason for asking is the market is pricing this as a $0. Bonds would get paid first and there is a lot of debt in pretty unproductive land (imo) for it to sell. However, with the preferreds last trading at $.25 and for some reason the common selling at $.30 I would like to pair trade them.

Short the commons and go long the prefereds in equal amounts. If the sales do not cover the debt then both the prefereds and common are toast and I would break even(ish). If the auction provides more than expected then the prefereds would have to paid in full $25 + intetest before common sees a dime. While there are not many shares and therefore a relatively small hurdle to jump to get to commons I would get $25/share and then lose out on the value of the commons. Overall probably a big money winner.

Thoughts?

BTW, I gave up my subscription and therefore ability to PM on here due to lack of time I spend investing.