AHM share price is now at $0.44, and went down like $10 in the past week. Can experienced investors give me advice as to if it would be a good investment right now to purchase this stock. Or does it mean that now since they declared bankruptcy that the stock is worthless, and will soon dip to zero??
Advice on this example and other similar companies that are priced so cheaply will be greatly appreciated.
Thank you very much!
2007-08-06 09:12:56 · 6 answers · asked by Pdawg 2 in Business & Finance ➔ Investing
K-Mart is a bad example to use. The K-Mart that went bankrupt is not the same company going by K-Mart today. If you owned shares in the original K-Mart, they are worth nothing. To get the shares of the new K-Mart, you would have to had repurchased the new issue of stock after it bought out the old K-Mart's assets.
Don't invest in bankrupt companies. There are plenty of good companies to invest in, why throw your money at an obvious bad choice.
2007-08-06 14:35:58 · answer #1 · answered by A5150Ylee 4 · 0⤊ 0⤋
you're talking about cherry picking winners from among the rotten apples. it's darn tough even in businesses you think you understand, much less some financial thing like this.
example: Circle K and KMart. both retailers went bankrupt. shares in both fell into the range of dimes. One of them turned out to have some value left in the wreck and their shareholders still had shares after it was over. The other wreck had no value left for shareholders and they were wiped out.
Guess which.
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I'm not good at guessing these. So my strategy is to look at the business that might arise from the ashes -- after the bankruptcy is all over -- and decide if there is enough reason for them to become successful once their excess debt and other obligations are gone.
In the case of both KMart and Circle K, if you bought after they came out of bankruptcy and held on, you'd have a five bagger within two years [5 times your money]. Their name and locations with consumers pulled them through.
In the case of multiple airlines, the case is less simple -- some have returned to bankruptcy court within a few years of their first bankruptcy. It wasn't enough.
Why might AHM make it? What do they have that will pull them through after the firestorm?
let's see -- they're big in their business but that means maybe 2% of the market. Which suggests that a lot of mortgage originators know them, but there are lots of other outfits and most originators have been doing business with more than one all along.
sounds pretty dicey to me .. i'll pass on AHM. Looks like a dead dog.
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Btw, KMart shareholders were wiped out in that case. Circle K's were not. But the strategy of waiting until the company came out of bankruptcy would have worked in both cases.
enough said??
2007-08-06 09:32:01 · answer #2 · answered by Spock (rhp) 7 · 0⤊ 0⤋
I owned some stock in another company that went bust. When they came out of bankruptcy, the old shares were worthless. They issued new stock to the new investors. It may only be pennies on the dollar, but if you can get it, do it. As with any investment loss, if you are in the USA, your losses are deductable on your taxes and can help to offset your gains.
2016-05-19 23:34:58 · answer #3 · answered by ? 3 · 0⤊ 0⤋
One cannot buy share as of this morning, the company will be delisted from the NYSE. Probably not a good investment no matter how cheap it is.
http://www.bloomberg.com/apps/news?pid=20601087&sid=ayarn96oE_kw&refer=home
2007-08-06 09:42:22 · answer #4 · answered by ireland 2 · 0⤊ 0⤋
K-mart filed for Bancrupcty....that stock went down to almost nothing....now it is $135 a share (SHLD) It merged with Sears but it still went up!
2007-08-06 09:21:25 · answer #5 · answered by Anonymous · 0⤊ 2⤋
This public company will be delisted soon.
DO NOT BUY ANY SHARES.
2007-08-06 13:23:00 · answer #6 · answered by Anonymous · 0⤊ 1⤋