MAN! It is down to 30 CENTS a share! A month ago it was at 60 CENTS a share. In 1999 it was an 80$ stock. Nothing has changed inside the company other than they bought a company 2 years ago who got a ton of asbestos claims filed against it last year. Sales are still strong, they are still a global supplier. I can't pass this up. I wanted it at 60 CENTS, but the wife said she was unsure. Bless her! I didn't think it could go any lower, but can it go lower than 30 CENTS a share? They still produce millions of dollars of products a year. I think people are just dumping it at the end of the year for tax purposes. If it goes back to where it hung for the entire year (@.60) then I'll double my $$$. Then again, the stock could go to ZERO and I lose it all, but I'm willing to take that risk. Who here DOESN'T have any Federal Mogul parts in there cars?
Re: ???? Yes. However... F-M has already filed for Chapter 11 bankruptcy protection. Did so last year. And if you look at the foundation of the company, their business hasn't fallen off, the only thing pushing down on the stock are these asbestos class-action suits. From a company they just happened to buy - in time to assume the headaches. F-M still has a global presence, they are still doing business the best they can under the tight financial circumstances. I'm figuring in a few years the stock will be back up pretty high. Assume you buy 3333 shares @ .030 each. Cost is $1000. If the price of the stock goes to $1, then your investment is worth $3333. You've tripled your investment. I'm figuring to someday see $20 a share. That's $66660 from a $1000 investment.
Why not buy a basketfull of WorldCom stock while your at the OTC counter ?? Its a .20/share and believe me, with 60% of the internet traffice travelling over thier network, not to mention all the Gov. Agencies using their pipes, Its not going ANYWHERE.....but up. Lay take a few years but you'll easily 5x your money by the end of their restruture.
you guys realize that all these companies are in bankruptcy...what usually happens is the creditors (some or all) get all the stock of the reorganized company...thus wiping out the old shareholders. This of course could change depending on the companies ability to pay interest on debt coming out of Ch 11. If the creditors are asked to take a hit on their bonds, loans, etc then they usually say "sure..we'll take a prinicipal reduction etc but in trade we get all or some of the equity in the newly-reorganized company. F Mogul is probably best compared to US Gypsum which went through a Ch 11 (yes-also from mounting asbestos claims..I think they filed in 1991. Came out of bankruptcy, bondholders got stock for their old bonds. BTW, US Gypsum thought they had solved their asbestos liabilities with that filing...as you may be aware they have filed again..same problem-mounting asbestos claims. This is just my opinion..do your own research if you are buying this stuff...but tread carefully guys. Thnx Patton
I worked for a large company for over 18 years until they were kind enough to lay me off (the one with the server "magic pixie dust" commercial). Bought their stock for years and lost a bundle when I sold it to buy my house in the early 80's. Stock is always a gamble. Now, if I had invested in 69 & 70 GS grilles/radiator supports and inner fenders along with pot metal chrome trim (and maybe $900 coolant tanks)I could probably retire now. :jd: Just be careful, seems like us little guys never make a killing. Only the money guys do. Just my 2 cents, Mark
This is what happened to the company I work at. Shareholders prior to the filing ended up with zero. The bond holders / creditors are now the "stake holders". They took a haircut in exchange for post bankruptcy equity. BTW - Our company is now thriving, but the old share holders will see zip.
Interesting. But if you own shares of the stock, aren't you paid SOMETHING when the whole restructure goes down if they want to pull the stock? You own equity in the company. Can they just say "later" and close the doors on you?
Jeff, I would have to say, don't put any more money into Fed Mogul than you can afford to lose... it could take years for you to make any $$ at all. By the way, at 30 cents, aren't they pulled from trading anyway? I thought when a stock fell below $1/share, they are typically de-listed by the NYSE...??? Now, this doesn't involve a bankruptcy situation, but 3(?) years ago, I almost pulled the trigger on a local company's stock, Great Plains Software, when it had fallen to about $16/share. It HAD been considerably higher, but all stocks were spiraling downward at the time. I was acquainted with the President of the company, and was confident it would rebound, but I hesitated, deciding my retirement money was best diverted into my employer's 401k funds, with a 50% match. Well, the stock did rebound, considerably, into the high $50's, and about a year ago or so they were bought out by Microsoft... ou: ou: ou: :ball:
We own FM stock and we've taken a bath on it. We got it when it was 1.20 a few years back and we've had to ride it out. Hopefully, it goes back up or else I'm screwed. Don't buy it, it's a loser.
Risk vs. Reward What it all boils down to is risk vs. reward. Some people get rich on long shots. Most people lose their investment. It seems the market has given its opinion on this stock. But you just never know.................................................... Good luck with your decision
Yardley...once again, I mention this only for informational/casual discussion purposes, not for anyone to rely on...when a company files for bankruptcy protection the company(or the estate as some refer to it) and everyone that deals with that company (ie suppliers, lenders-the creditors) become subject to the jurisdiction of the bankruptcy court and the Bankruptcy Code..the Federal laws that are "the ground rules" of how the company and the other interested parties can effect and deal with each other. Within these ground rules there is a section of the Code that sets out priorities...in essence who gets paid back first. Generally, at the top of that list are what we call the senior lenders..the banks that lend the company money for everyday use, etc and/or those whose interests are secured by first liens on all that company's property(I'm leaving out the IRS etc as there are others that have this top priority). Once again generally, next in line are what they call subordinated lenders or creditors...these are typically bondholders(basically also lenders of money to the company but with longer maturities-company was not going to have to pay them back for years....5-10 or more years). The bondholders lend money with the understanding that the company can incur debt that will be senior to them(ie-the bondholders know the company will be borrowing money from banks, etc and that those banks are "senior" to them). Just as the senior(ie bank) lenders can make loans to the company that are junior or senior to other bank lenders...the bondholders may be split up with some bondholders being senior to other bondholders...so you can have senior BONDS and junior, or subordinated, BONDS. So now you can potentially have seniority issues within these subgroups of creditors(banks, bondholders, etc) and all the conflicts and fighting that would go with that status. Finally, last in line, for our purposes here, are the equity(stock) holders...remember..stockholders are not lenders...they are owners of the company. Put simply, the Bankruptcy Code in essence says that in a bankruptcy liquidation(Chapter 7 bankruptcy)..you take the proceeds from selling the assets of the company and start at the top..paying off senior lenders first, then if any $ left over you pay the subordinated lenders next.....and then only if there's any $ left after all the creditors are paid then there is still value left to the company..this is the equity(stock) value. In a Chapter 11(reorganization)...it is somewhat similar in that everyone negotiates and agrees (or tries to) who is willing to take a hit and how much of a hit they will take. Unfortunately, for stockholders, the Ch 11 process is also a convenient time for the company to decide to reduce it's debt load so it won't be spending so much of it's revenue making interest payments on debt(it has other uses for that money-plants, equipment etc). So, in the bankruptcy process the company will ask certain of these lenders(banks, bondholders, etc) to take a hit. Bear with me here...You sound like someone interested in this stuff since you were willing to put your $$$ at risk in the market. Basically, the way I understand it, the bankruptcy laws allow these lenders that take a hit to agree to it but at the same time "make up" for taking the hit by demanding and/or negotiating for something in return...since the bankruptcy law has to honor the seniority amongst creditor classes the only thing these guys can do to make up for the hit is to "take it out of the hide" of someone BELOW them in the priority scale..thus the lender/creditor class looks to the equity class as their chance to be made whole. They take all or part of the equity in the newly reorganized company...compensation for taking a hit on their loans. This is a very simplistic view of what happens in the corporate bankruptcy process....the recoveries that each class gets are determined by negotiations by and amongst these various classes under the umbrella(jurisdiction) of the bankruptcy court. In the Federal Mogul case you have an additional class of claimants...the asbestos claimants....something will have to be "carved out" or set aside to satisfy them(to get them to drop their claims)...Don't quote me on this but I would bet they rank well above the stockholders in the priority scale also. The bankruptcy court is more of a forum that forces all these various creditor classes to get organized, line up in ONE court, and duke it out...before the company filed for Ch 11 they were probably getting sued in many different state and federal courts...a huge mess. Now, with the filing, the company can tell EVERYONE...hey guys, new ballgame...show up in this (bankruptcy) court at this time and lets ALL work it out..and if you don't you will have NO CLAIM once we exit bankruptcy. Now, back to our subject...in a Ch 11 reorganization a "reorganization plan" is put together by the company (usually after negotiating that plan with all the various classes. That Plan places a new, overall value on the company, post-bankruptcy...in essence this proposed value is what is split up amongst the creditors and other classes...is the value of the company, at the end of the bankruptcy, going to be enough to make all the creditors and other classes that are senior to you (stockholder) whole? If not then there will not be anything left over "at the end of the day" to give to the stockholders?(remember..they are at the BOTTOM of the priority scale) Here's another way of thinking about it...when a company files for bankruptcy they are in essence stating we don't have enough money to pay all our creditors on a timely basis...and we want our creditors(some or all) to take a hit...the bankruptcy law allows the creditors to say "OK, we'll take the hit but we have the right to make up for the hit by taking something (in this case stock in the "new company") from those below us in the priority scale". Or, put another way, bankruptcy is a process where everyone lines up, gets told they aren't entitled to everything they thought they were....and then each guy in line turns around to the guy behind him and says..."this is coming out of your A*#!!!" Once again, sorry to ramble but I really enjoy this stuff (BTW..this is what I do for a living...since 1991) and I see this happen a lot. This is for informational purposes and is not legal or investment advice. Patton
Yardley Also thought I'd post the short answer to your question(s)...No as a shareholder you are not automatically entitle to anything in a bankruptcy...and Yes they can shut the doors and give you nothing...and you have no say in it (Chapter 7 liquidation) Thnx Patton
Here's something to ponder. I read the following in Ward's AutoWorld: 475,000 claims! :jd: A few years back when TCI Automotive was owned by Federal Mogul and they were in their aquisition frenzy, the stock reached $70/share. It was the fastest growing automotive stock. We were recieving shares as part of the company matching in our 401K plans. Well, that portion got flushed down the crapper. :af:
Now that you mention it..the asbestos claims are coming out of the woodwork...This has been an interesting development to watch, from where I sit...The guys like US Gypsum thought they had it handled in the last bankruptcy...their annual reports etc used to say, in effect, that the company didn't expect future claims to have a material effect on the financial condition of the company(this is what you heard in the years immediately following there exit from Ch 11 back in the early 90's)...as time went on the claims continued to increase and accelerate. The real trigger for most of these guys was what we call "the last man standing" effect. As, in the past couple years, one or two companies with asbestos liabilities were forced to file for bankruptcy, the asbestos claimants had to go after the solvent (meaning those who had not yet filed) companies that much harder and faster....so every time one company would file the claims would accelerate against those that had not filed...thus exacerbating these "solvent" company's situations...and forcing them to file. Almost to the end (meaning their latest Ch 11 filing)..USG management stated they thought they had adequate reserves to handle future claims...but they couldn't make any guarantees and they couldn't foresee this snowball effect (probably really could have but no one is going to admit it outright). It's a vicuous cycle that may or may not work itself out. What is sad is that a lot of those with legitimate claimants never really get what is due to them....I'm not passing judgment on anyone out there that's been effected by this mess ..I've got opinions both ways..but the whole asbestos business has turned into a huge quagmire. Patton
Yes Patton. I used to be a stockbroker in a ormer life, as it were, but the bankruptcy laws aren't my specialty. You keep referring to the dreditors. In a bankruptcy the main (if not only) goal, is to restructure your debt. As long as the company stays in business, the stockholders will win or lose based on what OTHER stockholders are willing to pay for the stock. Bankruptcy will not remove a stock from a stockholder, unless the company goes out of business and is forced to liquidate to pay the dreditors. I'm gambling that: 1) the stock went from .60 to .30 in the last month from people readjusting their portfolios for tax purposes, 2) that it will go back to .60 a share soon, 3)will settle the asbestos claims and get on with business, 4) stay in business, 5) be a real stock someday. Besides, I want to be an owner of that company because I use their products. This is a long term hold. I'm not looking to get rich quick here. There are probably better buys (I am looking at Worldcom too), but I want to own this particular company. And you are only delisted off the NYSE if your price falls below $1/share for 30 days. FM is traded over-the-counter now.
Yardley....you are not correct on the latest point you made(that stockholders are only wiped out in a liquidation)...THAT IS THE POINT I'M TRYING TO MAKE!!!!...and where most people that buy these bankruptcy stocks err...STOCKHOLDERS CAN , AND ARE, COMPLETELY WIPED OUT IN Chapter 11 reorganizations ALL THE TIME....It happened in the example I used(US GYPSUM) and has happened numerous, and I mean numerous, times before and since then. Same thing happened in Zales Corp, Ampex, Southland(7-11) etc etc....all companies that reorganized, are still in business today, but gave old shareholders essentially ZERO in the process. You need to understand this concept BEFORE buying this stuff. Patton
Free Money! Where's my check book? Home equity loan's are awfully attractive now, right? Just think of all those free lunches................................
Yardley..I'm not trying to be argumentative here..just making sure the correct info is out there. Re: the quote above-bankruptcy will, and does, all the time, remove the stock from the stockholders when the company stays in business. Thanks Patton
