Here's a thought on Current Situation
Taking a late lunch - on the road -- but I think this is valuable information, so I will post.
Note: SEC has now admitted that Illegal Naked Shorting Exists.
Note Chart for ABWTQ
ABITIBIBOWATER INCORPORATED $ 0.02
ABWTQ 0.00
Daily Short Sale Volume - NEW
view
Short Interest (Shares Short) 1,499,900
Days To Cover (Short Interest Ratio) 6.2
Short Percent of Float view
Naked Short Selling List - NEW
view *******************************
Short Interest - Prior 1,613,400
Short % Increase / Decrease -7.03
Short Squeeze Ranking™ view
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From another board:
Facts: Shorts do not have to cover this one!!
30-May-09 03:27 am
1.) GM shares will continue to trade until the company EMERGES from Chapter 11.
In all likelihood they will be delisted by the NYSE sometime shortly after they file Chapter 11 and trade on the pink sheets.
2.) While in Chapter 11, whether the bondholders buy into the new deal or not, GM will continue to operate, almost as normal, while it begins to implement the changes that the government and consultants have suggested are necessary to perhaps be successful in the future.
3.) The Chapter 11 will take anywhere from 3 months to 18 months to be completely resolved and when it is resolved the company will EMERGE and ALL OF THE CURRENT SHARES WILL BE CANCELLED.
4.) There will be nothing given in return for the cancelled shares.
5.) If someone is short the stock there will be no need for them to "cover" their short position, only file copies of the reorganization plan with their broker and any margin held against the position will be released (this is called a terminal short.)
6.) There will be tax due for the profits on the short position, even if never formally covered by a trade. The profit will be deemed to have occurred on the day the company emerges and the shares are cancelled.
7.) Between now and then the stock will continue to trade and may spike up and down for a variety of reasons such as:
a.) People who have held for a long time figuring, "how much more can I lose" and thus NOT selling. The obvious answer is, since the stock WILL be cancelled, that they can lose whatever their stock is worth when they decide to NOT sell it.
b.) People who DO cover their short positions and are willing to forego the remaining drop to zero, so that they can free up their collateral margin, which will create some buying.
c.) Naive people who do not understand that what is happening to the company has no bearing any more on the value of the stock in the future. So even if sales fo up 30% while the company is in Chapter 11, the stock is still cancelled when they emerge. The reason for this is that until and unless the company can make all claims against it 100% whole (bondholders, secured creditors, trade creditors, union health fund etc.) Bankruptcy law does not allow for anything to common shareholders. In rare instances there is either enough in the company to leave something over for common shareholders (usually if a company files to avoid litigation) or to shorten the process (as they are currently trying to do with the bondholders) the shareholders are thrown a "bone" so they do not add more legal fees or delay things. That "bone"....if the creditors are not made whole, may not be more than an "out of the money" warrant to buy stock in the "new" company at a price which would make the creditors whole if the stock ever reached it and the creditors have taken stock for all or part of their claims.
d.) Hypesters and day traders who attempt to take advantage of a, b and c above in order to create a quick profit, or escape from an ill-advised position they took before the filing.
e.) Momentum copycats who say "Gee, the stock is rising, something must be happening." The response to that is to not believe your neighbor can really fly if you see him jumping off the roof!!
yld8041
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So a lot of hedgers (knowing that the stock will be cancelled are naked shorting (terminal short). Zero out and they make $0.02 / per share -- no questions asked -- there could be 50 millions shares naked shorted as of the Cancellation Date -- these guys all think it is no risk -- now. What happens if there is a buy-out (on a share deal). Stock goes to $2.00and these guys are completely naked. Oh my god. OR the District Trustee says not good enough Mr. Managagement go back to your drawing board and find 4.5% for shareholders. Who knows.
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Re: Facts: Shorts do not have to cover this one!!
30-May-09 07:00 am
Great post.
A few other issues affecting price...
- expiring in-the-money puts requiring share purchases to cover.
- forced share sales when GM removed from various indexes.
- more gov't regulations of short selling.
IMO, share price should bump around for the next year or so, based on all these factors, ranging from $0.05 to $0.30.
sam8002bc
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