Bankruptcy Predictor Model Message Board

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Strategies & Market Trends : Bankruptcy Predictor Model

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To: Bob Rudd who wrote (249)	4/3/1999 10:36:00 AM
From: Sir Auric Goldfinger	Read Replies (1) of 477

In fact Bob, your question is what shorting is really all about. By the time BK rolls around, one may have a very high percentage of success in initiating a short that they won't need to cover, BUT the return may not be that great since by then, the stock is probably pretty beaten up. What is really interesting is catching things just as they are beginning to go to hell in a hand basket. Things like AP increasing over 30% from prior/average quarters and significant decreases in working capital are nice. Insider selling and new significant shorting activity are telling you something is worth looking into. A ratio of operating income to operating cash flow that is outside the 80 to 120% range is also worth some sniffing around at (a lot of MO stocks generate hockey stick growth in operating income, but have flat or negative consumption of operating cash). This is the kind of stuff that makes our hearts race. Probablistic modelling of these types of variables and others hopefully to be suggested by this thread are what then give you a hint that some serious fundamental research is warranted to seperate the wheat from the chaff.

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