You might think the smart thing to do is to short the stock, but then the five feet man that tried to cross the four feet river on average yada yada margin call problem.
However, there is exactly one entity that can sell short HTZ without ever being margin called. And it is, amazingly, the same entity that can (and almost certainly will) delete the shares. Yes, the company itself, a debtor-in-possession that since the Ch11 filing has officially zero duty to the shareholders and is supposed to maximize the value to the creditors.
The Big Short for the March'20 trading mania.
While we're here, can we get TSLA to $4000 just like Cathie Wood has predicted? And maybe a second IPO attempt of WeWork? I want a few more cherries on the top and then the re-pricing of risk and the beginning of the recovery.
> might think the smart thing to do is to short the stock
Shorting bankrupt companies’ stock is unusually risky. Short sellers have to deliver the stock to close the trade. Bankrupt companies have a habit of ceasing to trade when their equity gets wiped out. This has left short sellers stranded with no way to close out the position, a costly situation to exit.
In the short term the stock market is a voting machine, being vulnerable to fashions and fads. In the long term it's a weighing machine that evaluates the actual earnings of the company. That was true in 1934 when Graham&Dodd penned it down in "Security Analysis" and it's still true today. Just look at what happened when WeWork tried to go public. It's just that "short" term in the stock market can be a decade or longer.
Yeah ultimately you always have the option of treating a stock as what it actually is (a stream of dividends), and the more random prices get, the more people will do that (because more dividend streams will be priced below NPV)
However, there is exactly one entity that can sell short HTZ without ever being margin called. And it is, amazingly, the same entity that can (and almost certainly will) delete the shares. Yes, the company itself, a debtor-in-possession that since the Ch11 filing has officially zero duty to the shareholders and is supposed to maximize the value to the creditors.
The Big Short for the March'20 trading mania.
While we're here, can we get TSLA to $4000 just like Cathie Wood has predicted? And maybe a second IPO attempt of WeWork? I want a few more cherries on the top and then the re-pricing of risk and the beginning of the recovery.