It's the reason I've spent a whole lot of my time as an investor... following stocks in bankruptcy.
Some is that, if you can capture the one of a thousand that actually makes it through, there's good money to be had in owning that lone survivor... and, trading to be done on the margins, often with big moves in small numbers. More, though, is that there's a culture and a process involved... a company with responsibility to shareholders... and a reality that one penny in debt makes the shareholders interest irrelevant.
The company dies, but just as often its assets are just recycled... the assets often don't go away... they're just put in hiatus for a respectable period... until the shareholders lawyers quit watching... and then the bank, as new owner of the assets... turns out to also have an interest in ownership of some other company that's, remarkably enough, a perfect fit for those assets... fiduciary responsibility be damned.
GE, of course... used to make things. Quite a while ago, however, they became a finance company. Trade them like you would any other payday lender ? No... that's not right. Trade them like you would any other payday lender... when the paydays all stop.
As far as the math... until they pull the listing... there's always 100% more that any stock can fall... and almost of them will do that full 100%, eventually. |
