Thoughts on YRCW?

In my opinion YRCW will go bankrupt. I thought of buying it when it hit 90 cents a couple months ago - decided to risky, and since then ive watched the stock go up to $4, i assume on short covering. Today FedEx posted awful numbers. Since YRCW is a truck company coupld YRCW post bad numbers too? Looks like YRCW's earnings are next month.

Thinking of shorting. Any thoughts?

 

My initial read of this:
http://finance.yahoo.com/news/YRC-Worldwide-Defines-Key-prnews-2960887297.html?x=0&.v=1

suggests that there is 95% dilution coming.

Does anyone disagree with my analysis?

 

down over 50% but finding it difficult to locate shares to short

 

The stock is a buck and a half, near solid support for the last 12 months. Even if it tests the July low of .89, the risk to reward ratio is not good in my opinion.

 

I'm with logikos.

 

I have a slightly different view. With 95% dilution coming, it's unlikely the stock will get back above $2.50. On the downside, it could well go below 0.89 due to the issuance of additional common stock.

 

If you see opportunity in it, my friend, then that is all that matters. Happy trading

 

This would, say, qualify as an analyst DOWNGRADE?

"RBC notes YRCW reported 3Q09 earnings Friday morning of ($2.67) vs the consensus est of ($1.70). Additionally, YRCW announced that it renewed its asset-backed securitization facility as well as its credit agreement and is in discussions with its debt holders to do a debt for equity exchange. YRCW continues to see very significant volume erosion YoY, above and beyond that of its peer group. Ultimately, they believe that the volume declines will continue, pricing will remain an issue sector-wide and YRCW will continue to report operating losses. As a result, they believe the stock has no value and therefore their price target is $0.00."

 

I think there was at least one other broker downgrade in the last 2 business days.

However with the stock now at $1.32 and a market cap of of $78 million, there isn't as much downside left.

On the other hand, I was happy with the premium I received for selling some $2 calls earlier today.

 

Update on YRCW:

On 17 Feb 2010, shareholders approved the massive dilution, and the company proceeded to increase its common share count by over 38 million shares. (over 957 million shares prior to adjustment for reverse split).

On 1 October 2010, the company completed a 1:25 reverse split.

So the share prices mentioned earlier in this thread are much lower than the split-adjusted share prices.

For example, the quoted 8 July 2009 low of $0.89 is the same as a post-split share price of $22.25.

Last night YRCW closed at $2.68 (more than 87% lower than the July 2009 low).

Based on yesterday's news of more dilution, the stock looks set to break below its 52-week low of $2.50.

http://www.sec.gov/Archives/edgar/data/716006/000119312511049493/d8k.htm

"On February 28, 2011, the Company and the other Consenting Parties reached a non-binding agreement in principle in the form of a term sheet entitled “Summary of Principal Terms of Proposed Restructuring” (the “Term Sheet”) setting forth the material terms of the potential restructuring of the Company and its subsidiaries (the “Restructuring”), thereby satisfying the AIP Condition in the Credit Agreement"

"In the event a Restructuring as contemplated by the Term Sheet is completed, the Company anticipates that the current stockholders of the Company will be very substantially diluted."