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

To: Jurgis Bekepuris who wrote (49184)	8/22/2012 12:56:14 AM
From: Jurgis Bekepuris	Respond to of 78744

MTLQU - Actually it may be more complicated and worse than I initially thought. It seems that new allowed claims get both units and GM shares+warrants (that were already paid to other allowed claims in the past). In other words, each additional allowed claim not only dilutes the unit count, but also reduces the assets under liquidation by removing some of the GM shares+warrants in the assets. In essence it is double-dilution. So really you have to estimate how many remaining claims will be allowed.

To: Jurgis Bekepuris who wrote (49184)	8/22/2012 9:17:13 AM
From: paulelgin	Read Replies (1) \| Respond to of 78744

Re: MTLQU Thanks for your analysis, Jurgis. Here's the math I used: 30,158,595 units currently issued or pending issue. The Trust currently holds: 23,258,394 shares of new GM ($21.63) 21,143,880 new GM warrants, which can be exercised at $10 (I'm calling that $21.63, since they can be exercised at any time) 21,143,880 new GM warrants, which can be exercised at $18.33 (I'm calling that $21.63, since they can be exercised at any time) That's $1,417,763,311.02 in value, divided among the 30,158,595 units. I'm not sure how dilutive the warrants are to GM shares. Anyway, that calculates out to $47 of potential distributions per unit. In 2Q there were 121,650 in new claims against the Trust, which meant 484,167 shares of new GM were distributed, and 440,373 of each warrant were distributed, along with 1 unit for each claim (so, 121,650 new units issued). Essentially, right now a unit-holder would get 0.77 new GM shares per unit held, and 0.70 of each warrant, if there were no more claims against the trust over the remainder of the trust's life. This is unlikely, but, 0.77 shares of GM at yesterday's closing price, equates to $16.65 per unit, when I paid $15.20 per unit, and the 0.70 warrants equates to $15.14 of each warrant, per unit. Given the fact that there will be more claims against the Trust (though, who knows how large those claims will be - one would assume most of the bondholders have been active in making claims already) these figures will be decreased somewhat in the coming quarters. The $10 warrants should be a fairly safe bet for remaining above their exercise price, the $18.33 warrants, maybe not, and the GM shares will always be there. I'm not saying this situation is any easy triple, or even a double (I've never invested in a liquidation before), but I do believe these units offer the potential for an adequate return on capital as currently priced. Paul Elgin

To: Jurgis Bekepuris who wrote (49184)	10/4/2012 3:23:46 PM
From: paulelgin	Respond to of 78744

Re: MTLQU Has anyone else done work on this security? I purchased some back in late August for $15.20, and it now trades over $18, a nice 20% gain in a little over a month. I like Seth Klarman's writing on this topic: "If value is not likely to exist in what the herd in buying, where may it exist? In what they are selling, unaware of, or ignoring. When the herd is selling a security, the market price may fall well beyond reason. Ignored, obscure, or newly created securities may similarly be or become undervalued." I truly believe MTLQU falls into the category of an obscure AND newly-created security that is undervalued. My type of investment, indeed. Happy hunting, Paul Elgin

To: Jurgis Bekepuris who wrote (49184)	2/12/2013 1:41:50 PM
From: paulelgin	Read Replies (2) \| Respond to of 78744

re: MTLQU My position in this liquidation unit of the bankrupt "old GM" has risen over 55% since I bought-in over the summer. This particular security brings to mind Seth Klarman's "Margin of Safety:" “If value is not likely to exist in what the herd is buying, where may it exist? In what they are selling, unaware of, or ignoring. When the herd is selling a security, the market price may fall well beyond reason. Ignored, obscure, or newly created securities may similarly be or become undervalued.” MTLQU was truly an ignored, obscure, AND newly created security over the summer. I hope others of you followed me into it. Regards, Paul Elgin