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Buying Stock In Chp. 11 Airlines?  
User currently offlineUAL747 From , joined Dec 1969, posts, RR:
Posted (9 years 3 weeks 1 day 9 hours ago) and read 2196 times:

For all you finance brainiacs, I have a question for you. Delta is currently trading at $.77 a share, since I checked this AM. However, unlike NW, DL has yet to change their stock ticker, which means the current shareholders still have their investments in DL protected.

At any rate, my financial consultant doesn't think it's a good idea, but comparatively, American Airlines has been trading around $12.00 a share.

I'm looking to invest in DL, but I'm a little scared that they will change their ticker, and I'll no longer have the money.

Anyway, do you think this is adviseable? I guess I'm wondering a little about DL's plans for reconstruction. (Or is that insider trading? LOL).

NW is trading around the same, though they changed their ticker.

UAL

13 replies: All unread, jump to last
 
User currently offlineLuv2fly From United States of America, joined May 2003, 12119 posts, RR: 49
Reply 1, posted (9 years 3 weeks 1 day 9 hours ago) and read 2186 times:
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NO, run do not walk. And there is a reason he is called a financial advisor, take the advise you are paying him for.


You can cut the irony with a knife
User currently offlineEMBQA From United States of America, joined exactly 11 years ago today! , 9364 posts, RR: 11
Reply 2, posted (9 years 3 weeks 1 day 9 hours ago) and read 2168 times:

Airlines are big money loosers....even in good times. There are a few gems, but they are very few. The chances of DAL disolving their current stock are very very high. You would loose every cent you had with no re-course. I would ONLY do it if with hesitation you would take that same money you would use to invest and burn it to a cinder and not care.

Take the advice of self made muli millionaire Warren Buffett, " The only way to make a million dollars in the airlines is to start with a billion"



"It's not the size of the dog in the fight, but the size of the fight in the dog"
User currently offlineOPNLguy From , joined Dec 1969, posts, RR:
Reply 3, posted (9 years 3 weeks 1 day 8 hours ago) and read 2109 times:

Do NOT, repeat, NOT, but stock of any firm that's in Chapter 11 proceedings.

Yes, their stock ticker symbol is still there. Yes, stock is still being bought/sold. Yes, it's priced at sub-$1.00 a share. The problem in your case is that you're looking at that sub-$1.00 share price as if this is a "penny stock" that you can buy cheaply, and with the apparent notion that it's going to go up to $5 or $6 a share and you'll make some good returns. What you're not realizing is that in a Chapter 11 proceeding, the stockholders get to see their equity (shares) go "poof" and become worthless for anything other than wallpapering the rec room, or for use in the bathroom.

Don't waste your money....

[Edited 2005-10-03 19:54:30]

User currently offlineRoseFlyer From United States of America, joined Feb 2004, 9666 posts, RR: 52
Reply 4, posted (9 years 3 weeks 1 day 8 hours ago) and read 2090 times:

Quoting UAL747 (Thread starter):
I'm looking to invest in DL, but I'm a little scared that they will change their ticker, and I'll no longer have the money.

DL's stock will almost certainly be cancelled when they approach an exit to Chapter 11. That would make your money disappear. If you want to be super risky, then buy the stock of the reissued company after bankruptcy if you want some risk. AA's stock went up so much because they avoided bankruptcy.



If you have never designed an airplane part before, let the real designers do the work!
User currently offlineGoingboeing From United States of America, joined Dec 1999, 4875 posts, RR: 16
Reply 5, posted (9 years 3 weeks 1 day 8 hours ago) and read 2076 times:

Quoting UAL747 (Thread starter):
I'm looking to invest in DL, but I'm a little scared that they will change their ticker, and I'll no longer have the money.

That's exactly what will happen. Trading in stocks of bankrupt companies is pretty risky - you pretty much have to be willing to sell when/if it hits $1.00 and not hope for $12 - if you do, you'll find what you bought to be worth $0.00.


User currently offlineMetsfan1 From United States of America, joined Jul 2003, 141 posts, RR: 0
Reply 6, posted (9 years 3 weeks 1 day 8 hours ago) and read 2056 times:

Equity of companies in Ch 11 gets canceled 99.9% of the time. The only reason to trade the stock of a Bankrupt company is to buy a huge amount at say $0.77 and hope it goes to $.90 the next day and sell it. However should you hold on when the Bankruptcy Plan becomes effective the stock will get canceled and you will be left with nothing.
Stay away from the stock of companies in Ch 11.


User currently offlineYOWza From Canada, joined Jul 2005, 4900 posts, RR: 15
Reply 7, posted (9 years 3 weeks 1 day 7 hours ago) and read 2001 times:

Stay as far a as possible from anything that has even a hint of C11 attached to it. You will thank yourself later.

YOWza



12A whenever possible.
User currently offlineMariner From New Zealand, joined Nov 2001, 25426 posts, RR: 86
Reply 8, posted (9 years 3 weeks 1 day 7 hours ago) and read 1991 times:
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To reinfoprce the point that the others are making, this is what United has to say about its own stock:

http://www.united.com/page/framedpage/0,6837,1378,00.html

"What does it mean that the common stock will be cancelled? Why aren't current common stockholders receiving anything under the Plan?
As the company said would likely be the case for some time, the proposed Plan stipulates that UAL's current Common stock will be terminated and cease to have any value. Unfortunately, current stockholders are unable to receive any distribution because under the law, stockholders are only entitled to receive anything for their equity interests after most creditors are paid in full, which will not be the case.


As to US Airways, the stock is cancelled and the stock holders received nothing.

cheers

mariner



aeternum nauta
User currently offlineIsitsafenow From United States of America, joined Feb 2004, 4984 posts, RR: 23
Reply 9, posted (9 years 3 weeks 1 day 7 hours ago) and read 1986 times:

Usually when a company comes out of Chapter 11, there is an announcement of new issued stock. That's when to buy....after you purchase a couple of grand's worth, wait 48 to 72 hours then sell. New stock goes up quick in the beginning then falls back. That's when to make to few bucks. It's all timing.
DO NOT buy the stock that's out there now. It's the new issue you are
interested in.
Nothing is for-sure on wall street, so there is NO guarantee here.
safe



If two people agree on EVERYTHING, then one isn't necessary.
User currently offlineJacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 60
Reply 10, posted (9 years 3 weeks 1 day 7 hours ago) and read 1985 times:

Quoting EMBQA (Reply 2):
There are a few gems, but they are very few.

made boat loads on WN in the 90's  bigthumbsup 


of course, anyone could have made money in the market in the 90's just throwing darts...


regarding DL, if you can somehow buy the bonds (i.e. the "IOU'S"), you would be better off

the stock will be worthless, with new stock issued if/when DL comes out of bankruptcy



"Up the Irons!"
User currently offlineJetdeltamsy From United States of America, joined Nov 2000, 2987 posts, RR: 8
Reply 11, posted (9 years 3 weeks 1 day 6 hours ago) and read 1957 times:

Quoting UAL747 (Thread starter):
NW, DL has yet to change their stock ticker, which means the current shareholders still have their investments in DL protected.

I don't think that is correct.

You "invest" in a bankrupt carrier, you're crazy. The stock has no value.



Tired of airline bankruptcies....EA/PA/TW and finally DL.
User currently offlineSllevin From United States of America, joined Jan 2002, 3376 posts, RR: 6
Reply 12, posted (9 years 3 weeks 1 day 6 hours ago) and read 1954 times:

Quoting Metsfan1 (Reply 6):
Equity of companies in Ch 11 gets canceled 99.9% of the time.

The number is nowhere near that high.

That said, for the specific cases of DL, it's quite possible. NW might -- might -- retain some value (and this is based on the fact that they did NOT get DIP financing before entering Chapter 11) -- but in either case (DL more than NW) it's a significant risk.

I would suggest that, until plans of reorganization are relased that define at least some baseline targets for common stock value, perhaps purchasing the stock would not be wise move.

Steve


User currently offline1MillionFlyer From , joined Dec 1969, posts, RR:
Reply 13, posted (9 years 3 weeks 1 day 6 hours ago) and read 1946 times:

The stock does have value, it can be traded, the trick is to sell it very short term. The people buying and selling the stock are doing so purely for speculation not for value so that makes it more dangerous.

when they emerge from CH11 it most likely will be cancelled.


I would say don't do it.


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