1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.

Buying stocks in Chapter 11?

Discussion in 'Making Money' started by darkman, Apr 1, 2009.

  1. darkman

    darkman Regular Member

    Joined:
    Jan 17, 2009
    Messages:
    455
    Likes Received:
    264
    Can we buy stocks that are in chapter 11.
    look at this ticker:spsn.Is dirt cheap.
    Can we make money of it?
     
  2. justthinking

    justthinking BANNED BANNED

    Joined:
    Aug 13, 2008
    Messages:
    475
    Likes Received:
    463
    Yes, you can buy shares in a company that has filed for bankruptcy. The shares are a fraction of what they once were. So buy them.

    I think I would 'pump and dump' the shares though. I wouldn't look at it as a long term investment. A day by day strategy or week by week at the most. If you had bought the stocks yesterday, you would be up 20% right now and that is only with a 2.5 cent rise in the stock.

    There is some disturbing news about the company though. $1.5 billion in debt, a new CEO, new restructuring expert, and there is no news of either an outright sale of the company or a merger with another company. They are trying to deal with their creditors right now but still no word about it either.

    Did I mention they are 1.5 billion in debt? How could they pay that off without either selling the company outright or merging? They couldn't. But if they find either one of those, the stock would soar overnight. It is worth the risk in my opinion.
     
    Last edited: Apr 1, 2009
  3. berrycorp

    berrycorp Guest

    i like the warren buffet theory when it comes to investing...

    never buy a stock you are not ready to hold for the next 20-30 years...

    buy the stock you wont mind holding if the stock market was to close today!

    its not something i would personally do... because i dont have to time to look at the stock prices all day.. m busy all day.!

    + i think u can make more money with IM than in stock market!

    rest is your call... thats just my personal opinion!
     
  4. bfellow

    bfellow Jr. VIP Jr. VIP Premium Member

    Joined:
    Jan 3, 2008
    Messages:
    322
    Likes Received:
    372
    Occupation:
    Self-Employed. No other title really fits.
    Location:
    Dark Side of the Moon
    Home Page:
    Buying the stock of companies in bankruptcy is one of the fastest ways to lose your money. Honestly you would have a better chance if you took the money you were going to invest in that stock and buying scratch tickets. Or even better yet, buying a shit ton of oranges and selling them by the freeway. The company is bankrupt for a reason, and it is not because of good management and a sound business model.

    Honestly the big problem is that a company going through bankruptcy is restructuring or shutting down. Either way the debt holders get first crack at assets, then the preferred stock holders, then the common stock holders (you).
     
  5. Hoops4me

    Hoops4me Junior Member

    Joined:
    Jan 24, 2008
    Messages:
    105
    Likes Received:
    275
    Occupation:
    Day Trader
    Location:
    Tar Heel heaven
    I agree with bfellow, It is a very bad idea to buy the stocks of companies going through BK. I am a day trader of 20 years and am willing to take great risks, but I won't buy BK stocks. Instead I would focus on stocks that are near BK and try to day or swing trade then. A swing trade is a trade of 2-7 days. The banks like CITI and Bank of america. have been good to me. Kust don't put all your eggs in one basket.

    One final note, we have had a pretty good runup lately in the stockmarket. If you want to go long I would wait for a pullback, or better yet buy some puts on stocks that are over extended.
     
  6. woodstuck

    woodstuck Junior Member

    Joined:
    Nov 20, 2008
    Messages:
    152
    Likes Received:
    107
    Occupation:
    Self-Hemployed
    Location:
    Checking the map now...
    Home Page:
    I'm with the rest... I have bought stock in bankruptcy...NOT recommended.

    Anyone remember Creative Labs number one sound card competitor 20 years ago? I thought they would kick their ass... instead (I kept buying even when in bankruptcy) I lost one of my asses. I WAS even in this hardware Industry and was SOOOoooo wrong.

    (I do not have ANY ass left for those type prayer beliefs)
     
  7. darkman

    darkman Regular Member

    Joined:
    Jan 17, 2009
    Messages:
    455
    Likes Received:
    264
    thanks for your comment guys.
     
  8. iSLaND

    iSLaND Registered Member

    Joined:
    Jan 28, 2008
    Messages:
    75
    Likes Received:
    40
    You can actually try to find out such companies which have sound business model but are bankrupt only due to current economic situation.
    Finding out might be difficult but definitely worth.
    Posted via Mobile Device
     
  9. Hoops4me

    Hoops4me Junior Member

    Joined:
    Jan 24, 2008
    Messages:
    105
    Likes Received:
    275
    Occupation:
    Day Trader
    Location:
    Tar Heel heaven
    You can also try to buy the stock once the company emerges from bankruptcy. I know that Kmart was an excellent buy once it emerged from BK court.

    I also agree with ISLAND in that there have been good companies that have knocked down too far because of the overall economy. I would look at a Merck or GE ans good examples. I recently made some good money on a bounce in Fedex stock.