MDR - quantifying the risk; simply remove BW's value from MDR
...Bankrupt BW in a worst case scenario - what's MDR worth without BW ? - one item for thought; they paid what for JRM alone in cash (VBG) ? - and what's their market cap today ?
... good points on VTS's earlier selloff, PGO as well; it looked as if the seismic sector was going the way of the dinosaur by the way these 2 were sold off - but were skyrockets of late and were in the prior cycle as well.
MDR screwed up bigtime. They tried to be "cute" - cover their fiduciary duty with boilerplate; that someone in light of Druckenmillers inside sales of late - used as gasoline on the fire... This "Asbestos" issue is not entirely new. Covering analysts "HAD" to have talked with the company about this issue and the potential - realistic potential liabilities involved. "IF" Pru for example with their huge position, or Fidelity's covering analysts did NOT consult with their, or outside attorneys on the asbestos issue - they should be fired, for a fundamental lack of due diligence... Also, investor suits ? Did anyone see any analyst reports even remotely mentioning "asbestos" liability as ANY type of an issue for MDR ?
This sounds like one time where litigation will be a positive; because someone dropped the ball big time... Those big fundies with those multi hundred million $ positions should shoot their covering analysts by firing squad at sun up tomorrow and not even bother with a trial... "IF" they never consulted experts on the "asbestos" issues.
This smells of one of the alltime great shakeouts that got every professional short seller on the Street involved; and the institutional holders simply puked... The only question is what is MDR's value here; if they simply crash & burn "BW" in a pre-packed BK reorg ?
<<In today's market if you can't help people quantify the risk, they're probably going to sell first and ask questions later. It's that simple,' Hallead said, commenting on the sharp drop in McDermott's share price.>>
Fund managers have an very predictible method of dealing with mgmt that has been less than forthcoming; even if the reaction is unwarranted on a valuation basis; ie: they dump now and don't even worry about asking questions later... MDR's biggest problem is not survival, or that their value is anywhere close to the present market cap assigned here; but rather that they have severly damaged their credibility with the street. Someone's career had better be over at MDR... But, also; their had better be a fund manager or two; like PRU's who a huge holder; lose their jobs as well. As they knew of this issue; but failed to ask the right, or the hard questions.
I am sure MDR bounces from short covering at the very least and "some" buying - mabe back to the $13-15 range, but the climb back to $20ish, then to their probable fair value right here of the high $20's may be a difficult one; because the funds are pissed... One reason the fundies can dump here and ask questions later; is they know when they dump 10M + shares in unison, driving a stock down 30-60% over 2 days; that the stock can not and will not outrun them; unless "THEY" choose to return because of the volume necessary to support a move of that degree in EITHER direction. Hence; their dump now and ask later; makes perfect sense...
I guess we'll find out soon (VBG).
I bought the hell out of OEI at $8ish - maybe their run to $12 will break me out of MDR... I will not double down & chase MDR here; actually if it breaks down monday - "outta here" - chalk it up on the loss side & offset some taxes...
There will allways be the opportunity to catch one hell of an up move, if things wash out positively... anyone who entered sub $9 may be smart in averaging down on a $2 move to $7ish; but those who got caught in the delayed open & gap down from the day before; shouldn't imho... unless its just a small position.
Mine will be offset by what I bought in OEI - "when" it goes to $12... had to give up a future big winner; just to break even; but such is life... we will be smiling if MDR turns around and goes back to $18-$20, let alone its recent high of $28ish - a triple+ from here.
Time will tell. |
