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Technology Stocks : Globalstar Memorial Day Massacre -- Ignore unavailable to you. Want to Upgrade?

To: Maurice Winn who wrote (528)	5/28/2005 8:22:23 AM
From: Dennis Roth	Read Replies (1) \| Respond to of 543

Here's something curious I noticed last night. The shares of bankrupt Loral Space have gone from $0.05 in December to $0.20 yesterday. finance.yahoo.com You could have quadrupled your money if you had bought in December and sold in April. This despite the fact that they filed a Reorganization Plan im March that says. biz.yahoo.com Loral's existing common and preferred stock will be cancelled and no distribution will be made to the holders of such stock. I think this is the 6% preferred and it still has value too. finance.yahoo.com Obviously somebody doesn't believe that there will be no distribution of anything of value to the shareholders, particularly for the holders of the preferred. Assigning a value to and the trading action of stocks of bankrupt companies is something I don't understand. It's obviously a game for specialists, gamblers, or the hopelessly optimistic. This reminds me of the stock of another bankrupt company I followed years ago. I successfully shorted at around $7.50 the stock of a clothing maker called Gitano that later went bankrupt. Shortly after they filed for bankruptcy, the shares quickly dropped to $0.05. But I didn't cover my short then, I was in no hurry to take my profit and I figured I would wait until it was trading for a penny or so. The bankruptcy plan, which I read, said the company would be liquidated, debt holders would get a fraction of what they were owed and the share holders would get nothing. The share price quickly recovered to $0.10 and for about the next two years it traded between 10 and 15 cents. I eventually ran out of patience and covered my short for $0.15 a share. As it turned out after the liquidation was done the share holders got a cash distribution of something like 10 or 11 cents even though the plan they had filed said they would get nothing. I wonder if the people trading Loral know, despite what the Reorganization Plan says, that they are going to get something or are they treating the shares like 20 cent lottery tickets?