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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: TimbaBear who wrote (15949)	12/25/2002 2:22:50 PM
From: Don Earl	Read Replies (1) \| Respond to of 78625

Timba, <<<They closed yesterday at the expensive price of $.26/share!>>> .26 would be terribly expensive under the circumstances. Once the plan is approved, the existing stock will be canceled, and new stock will be issued to everyone EXCEPT existing shareholders. You're basically looking at a 100% chance of a total loss. If you were willing to take a position in a VERY highly speculative play, you're only real chance of coming up with something with any kind of market value would be the senior notes. I'm personally not set up to trade corporate debt, and while I have a vague understanding of what the strategy might be, have no hands on experience on this kind of play. The idea would be to purchase some of the debt at a deep discount to face value and hope that eventually the stock you receive in the swap will be worth more than you paid for the debt. IMO, it's a play better left to those with a far higher level of expertise in evaluating the level of risk involved, and that's assuming there is a current market for the debt and there is an inventory of the debt available for sale. Have a Merry Christmas and don't buy stock with a Q on the end of the ticker symbol.

To: TimbaBear who wrote (15949)	12/26/2002 9:30:22 AM
From: Bob Rudd	Read Replies (1) \| Respond to of 78625

Timba: I haven't looked at Armstrong recently but would suggest looking at it's extended enterprise multiple with market cap and ALL debt like obligations [Including converts and preferred] less cash in the numerator and all cash flows to those obligations in the denominator before deciding this is cheap. The low share price can be viewed as a 'call' on the residual, but without knowing how far out of the money that 'call' is, it's hard to say it's cheap...I would expect that when all obligations are considered, the price reflects a way out of the money call. An online bond quoter showed Armstrong bonds being offered @ <50% which doesn't reflect much hope for the lower priority equity. OTOH, if there were ever a time for animal spirits to put wind in the sales of beaten down speculative issues, it's now, so you may catch a really nice bounce in Jan irrespective of the true value of equity's residual claims.