Forced selling by hedge funds and retail investors due to margin calls may present buying opportunities...
Chesapeake's (CHK) CEO McClendon Gets Wiped Out, Has To Sell Nearly All His Shares
October 10, 2008
streetinsider.com
From the article:"...Chesapeake Energy (NYSE: CHK) CEO, Aubrey McClendon, was forced to sell nearly all of his shares of common stock in the company over the past three days in order to meet margin calls...."
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Insiders Sell Shares Heavily Amid Margin Calls
OCTOBER 11, 2008
online.wsj.com
From the article:"...Coca-Cola Enterprises Inc. director Marvin J. Herb reported Friday that J.P. Morgan had taken control of 18.6 million of his shares in the bottler, and had already sold nearly 1.4 million of them for $17.7 million "pursuant to a credit arrangement." J.P. Morgan has indicated it plans to sell the remaining shares, Mr. Herb said in a regulatory filing. Company officials didn't return calls for comment....
...Officials at mall operator General Growth Properties Inc. have sold more than $120 million in company shares in recent weeks, much of it to pay off margin loans. Most of the sales were made by then-Chief Financial Officer Bernard Freibaum, who had been a long-time buyer of the stock. General Growth said that there won't be additional margin-call related stock sales by its executives...."
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Sumner Redstone forced to sell Viacom, CBS shares
Redstone's family firm dumps $400 million of nonvoting shares to raise cash to pay down debt.
latimes.com
From the article"..."This was a margin call in the broadest terms," said Hal Vogel of Vogel Capital Management, a longtime media analyst and investor. "When the banks don't renew your credit, you get a margin call and that is, in effect, what happened to National Amusements."..."
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Confessions of a Money Manger: Ultimate margin call hits global markets
Ray Unger — 10/10/2008 6:43 pm
madison.com
From the article"...Earlier this week, I spoke with a representative of Penn West Energy (PWE $15.73), one of Canada's largest and most-respected energy trusts. Last month they distributed 34 cents (Canadian dollars) or 32 cents (U.S. dollars) per trust unit. This is a monthly distribution. My questions concerned the trust's balance sheet, and its ability to continue making such distributions. Thirty-two cents per month translates to $3.84 per year for a current annual yield of 24 percent based on the trust's current price. Is this possible? Can Penn West actually yield such an obscene amount of money? I asked this representative who would sell at such a crazy price? He said that the institutional selling has been two to three times more active than usual. He further said that several hedge funds have been selling.
"Why?" I asked.
He didn't have a definitive answer, but his banking sources tell him that many hedge funds are being pressured to pay down on their enormous debt. Being levered 10 to 1 or even 5 to 1 is quite risky, so the banks are "suggesting" they reduce this leverage. That means they have to sell whatever they own. If they own oil futures, or energy trusts, whatever, they must sell. That could explain why we've seen oil futures fall so abruptly...."
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I bought a few shares of PWE Friday but now I am thinking of doubling my position next week on any continued (hedge fund) selling.
finance.yahoo.com
Anybody notice any other companies impacted by forced liquidations?
Companies in this position offer significant "value opportunities" as long as the selling is due to forced liquidation from margin calls and it is not due to "other" company specific problems.
EKS |
