Dan Loeb now long HLF. Stock halted. The whole world will try to squeeze Ackman it seems. He should never have boasted about the size of the position
You're right the letter is misleading, because it's written very carefully with regards to word choice. http://www.sec.gov/Archives/edgar/data/6201/000000620113000002/amr8kjanuary82013.htm Furthermore, the SEC filing contains the cautionary statement: "The Company cautions investors and potential investors not to place undue reliance upon the information contained in the Letter, which was not prepared for the purpose of providing the basis for an investment decision relating to any of the securities of the Debtors, including the Company's equity securities. No assurance can be given as to the ultimate value, if any, that may be ascribed to the Debtors' various securities, including the Company's equity securities. Accordingly, the Company urges that caution be exercised with respect to existing and future investments in any of these securities (including the Company's common equity) or other claims of the Debtor. " So while there is the "possibility that there may be value for AMR equity holders", given the use of the words "possibly" and "may be", and the warning, it could turn out that shareholders still get zero. Even if they get an amount above zero, they could get something much lower than $1.12 per share.
The thing is that the lawyer contacted the DOJ, I believe he's got a financial interest if there is an equity group to try to get value for the stock as the group is likely to pay him for consulting. But I'm starting to think a superior way to play bk stocks is to wait till they announce the bk plan was approved and the stock will be cancelled. The irrationality is likely to remain as the stock fails to drop 100%. In small bk companies this is hard to do because it is usually hard to borrow the stock but AMR has tons of shares in a lot of brokers so this is an option(still its better to be quick and short right after the open, perhaps even in the pre-market if that is possible after the plan is approved) There is more value in shorting right now but it is hard to do when 90%+ of the news are interpreted positively even if that is totally wrong. I'm even considering buying the stock right now for a further pop over the next days
1. You could be right, however despite today's news, the court has not (yet) allowed an equity committee. Also, the creditor committee and their lawyers will do their very best to ensure that shareholders get zero, or at best, a very small amount. 2. Yes for AAMRQ there is likely to be a very delayed reaction to the news once a plan is announced formally. 3. The stock has doubled from the 60 cent breakout area, and is struggling at the lower end of today's range. I see the possibility of a break above $1.25 as unlikely.
Loeb loves HLF PEG ratio âLetâs not forget: the business itself is performing well. Volume, revenue and earnings are all growing double digits and the balance sheet is largely unlevered,â Loeb said. ââ¦Applying a modest 10-12x earnings multiple suggests Herbalifeâs shares are worth $55-$68, offering 40-70% upside from here and making the company a compelling long investment for Third Point.â http://blogs.wsj.com/marketbeat/201...alife-pyramid-scheme-accusation-has-no-merit/ Stock is now an intraday casino
HLF pre-announcement and buyback got leaked like crazy. Stock was up like 9% by the time Gasparino broke the story. Sick