Delisted Stocks

[Citizen]

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We've been doinga lot of talking at work about investing in Northwest Airlines (NWAC). The stock closed at .90 on Friday and will be delisted from the Nasdaq on Wednesday next week.

As far as I can understand purchasing a delisted stock is tantamount to gambling. Northwest is looking at Chapter 11 bankruptcy. I don't really know much about that, but I do know that when Kmart reorganized, a lot of people lost everything on the Kmart stock they were holding which hit the Kmart retirees hard.

My gut feeling says that the gov't has a habit of bailing out airlines, and in the wake of the Katrina disaster they seem to be putting out fires by smothering them with money.

If NW completes bankruptcy, does all of the previously issued stock then go away? I just want to make sure I understand. A purchase of NWACQ next week would be a bet that Northwest will not complete the bankruptcy, and that the stock will still be good and relisted in the future.

I know that this is a 800 gorilla of a question, but just want to see if I am totally in left field.

 

[Show-me]

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Good question! All I know is that when Kmart went into bankruptcy and restructure anyone that was still holding that stock lost it. I believe the reason was that Kmart reorganized and change their company name to Kmart Holdings and reissued stock under that new name. Therefore the old stock was worthless because that company no longer exists. I believe the big debts were paid and the share holders got nada. Kmart ended up with a completely clean slate and that is why they were able to buy Sears.

As far as the government bailing out the airlines.......I don’t think they will. Money is getting thin and getting thinner. There are other airlines that are making it and IMHO let the airlines sink or swim. There are other airline just waiting to take over their routes.

As far as investing in a airline goes........I would like to also but something's got to break. IMHO someone will end up going down or absorbed by another airline. To scary for me.

 

[ou81200]

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Hello All---

IMHO, I believe that the goverment will continue helping the airline industry. Airlines are much too important to the economy for obvious reasons. As for the worth of bankrupt airline stock, keep an eye on United Airlines (UALAQ). This should give you an idea of what happens with companies emerging from bankrupty. Also, you can make money with these companies. But it's very high risk. I hope this helps .

 

[Show-me]

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But didn't the gov. stop with the loan guarantee’s. I would interpret that as a sign the gov. can not or will not continue to bail them out possible because of public pressure and two expensive wars. Also the fact that the airline’s are defaulting on their pension installments is not sitting well with the public. Public opinion is usually negative and the whispers are that the “Republican’s” are letting the “Corporation’s” out of their responsibilities to the workers because it will be more profitable for them. I don’t know but it does seem very risky to me. I wouldn’t bet the farm but I might buy a small lottery ticket’s worth.

 

[Show-me]

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Show-me wrote:

Also the fact that the airline’s are defaulting on their pension installments is not sitting well with the public. Public opinion is usually negative and the whispers are that the “Republican’s” are letting the “Corporation’s” out of their responsibilities to the workers because it will be more profitable for them.

This will be another presidential talking point come the next election. Dem’s will pound this into the publics minds when the time comes.

 

[ou81200]

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The goverment did stop the loan guarantee's. I'm only speculating, but this may have been to see what the airline companies are capable of doing financially. To see if they could bail themselves out. Also, the reason of the airlines failure to operate with positive money flow cannot be blamed completely on them. The big issue is fuel cost. This is something that the airline's don't have control over. Also the competition with smaller airlines is playing a significant roll. A floundering large company just can't compete with them.Currently, there are four airlines in bankrupty. That's a good portion of the industry. I've made money flipping United in the past. Not alot because I don't have the gonads to take that kind of risk.

As for the pensions, It's my understanding that the goverment made changes as to how companies work out their portfolios on retirement plans. This was due to the Enron incident. For example, companies are now only allowed to put a small percentage of their own stock into their own retirement plans. Companies have been forced to diversify. This way if a company folds, The retirement plan can still be intact. I imagine eventually this is something that airline companies will and must be held accountable for. As for the politics, The Democrats and the Republicans are allways goingto have their points of view and as far as I'm concerned, they can entertain themselves because I'm not very impressed with what they have been saying about this issue.

 

[Show-me]

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ou81200 wrote:

As for the politics, The Democrats and the Republicans are allways goingto have their points of view and as far as I'm concerned, they can entertain themselves because I'm not very impressed with what they have been saying about this issue.

I certain concur with that statement. I'm not very impressed with what any politician has to say anymore. My point was they will preach it to the masses and who knows what will happen. Hillary in 2008?

:shock::*:shock::*

 

[Rolo]

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Show-me wrote:

Hillary in 2008?

:shock::*:shock::*

More like:

:shock: :s

 

[ou81200]

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As Bill Murry said in Ghostbusters, nex there will be "cats and dogs living together".

 

[Show-me]

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ou81200 wrote:

As Bill Murry said in Ghostbusters, nex there will be "cats and dogs living together".

ROTFLMAO!!!

 

[Citizen]

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Thanks everybody for the input. I never did decide to purchase Northwest Stock. If it comes back, I believe it will be under a new issue of stock. Not that my opinion means anything, I only have a gut feeling and a mildly pessimistic outlook.

One good thing that came of it though is that I did look into opening a trading account and found that I could do some small change trading through USAA without having to come up with a large sum. So I set up an account and this morning made my first stock purchase. (NO margin trading.)

I notice nobody ever talks about individual stocks here, so if it's out of line please somebody let me know.

I purchased a few (very few) shares of Sanyo (SANYY) because they are the suppliers of hybrid batteries to Ford. Ford is promising to hybridize the moon, and is screaming bloody murder for more batteries. The Sanyo batteries are not as sophisticated as the Panasonics that Toyota and Honda use, but I would expect that to fix itself in short order given Ford's demand for hybrid batteries and the economic policies of Japan. (Let me clarify: based on one Business Anthropology class I took a long time ago, I learned that Japanese business society runs like one big competitive co-op and technology maintains a certain parity. This year Kawasaki is faster than Suzuki which is faster than Honda, but they sure run really close. No one of them will really trump the other.) So- I think Sanyo will be making more and better batteries for a hungry Ford relatively soon which will be good for the company, the stock and then me. Funny though, most of the articles I read refer to the company as "the troubled Sanyo." Based on my hazy pseudo insight (which could probably be used to argue that the unwashed masses have no place in the exchanges) I made my purchase and promptly lost 2.65% of the invested value.

My other purchase was a few (dozens, they were really cheap!) shares of Cray Supercomputer (CRAY not very long ago was CRAYE.) Robert Cray is dead, unfortunately, but when people think supercomputer they still think Cray. Cray has been producing some very competitive systems and has recently produced systems for Oak Ridge National Laboratory and Rice University. They were very nearly delisted recently, but weren't. If they continue to trade at the current prices, they may be delisted yet. I consider this a long shot. They are being sued by considerable numbers of people for performing so badly in the stock market. For my trouble, I lost 3.59% of the value of the stock today.

Dang these individual stocks are volitile! Anyway I didn't gamble much, there are probably folks here that had bottles of wine last weekend that were worth more than my entire holdings. But it's cool to look online at my "positions." BTW, USAA gives free trades for an introductory period. Once I actually have to pay commissions it would take quite a bargain to make it worth my while to purchase shares in the small amounts I'll be buying.

Just because this is the internet and you never know who might read this please let me state the following: Do not take my ramblings as advice. Making any opinion based on my dribble is no more wise than picking stocksby throwing darts at the newspaper: the classified section of the newspaper. Do not take my investments described above seriously, I don't. I'm just having fun, and thus far have received more entertainment value than the money I lost. I don't check the lotto numbers for a long time after the drawing because the ticket is SO much more fun before I know it's worthless.

Hmmm... maybe Krispy Kreme would be entertaining....:shock:

 

[Brak]

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Citizen wrote:

Robert Cray is dead, unfortunately, but when people think supercomputer they still think Cray.

Dead or Alive? - Robert Cray

http://www.deadoraliveinfo.com/dead.nsf/cnames-nf/Cray+Robert

 

[ou81200]

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Citizen---

Good luck on your stock purchases. If you are new at this, I would suggest "paper trading". Give yourself an imaginary sum of money. say 100,000 dollars. Then start picking out some companies that you think will do well. Do your due dilligence. This will help you for when you start trading seriously.

 

[Citizen]

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Did I say Robert?:shock:

oI meant Seymour. Seymour Cray.


Ou812: Thanks for the suggestion. I have been kind of picking stocks in my head, but that's a good idea to write them down and track how you would have done.