Joey Migs
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Jamie Dimon showed up on the scene of what had been a modest kind of tragedy in shares of his own bank’s stock … and went about wasting the survivors in the banking sector with some measure of dispatch. In the process, he helped give what had been an indifferent market more of a tone - and a negative perspective - than had been the case, setting equities up for another one of those final-hour belly flops.
Shares of Dimon’s JPMorgan (JPM) had been battling some pessimism in the session after UBS became the latest house to scrub the balance sheet of the banking giant in order to figure out how the write-downs were going to affect profits. Not too positively for the December-ending quarter, as it turned out - 15 cents instead of the 27 cents that analysts have, on average, forecast - but not too aggressively for the full year - UBS setting $1.48, versus $1.51, on average.
Then Dimon showed up on CNBC-television, and started talking about the housing market - prices could fall another 20% next year - and the mortgage market, where conditions are likely to deteriorate further. The trading business isn’t great shakes either: Dimon characterized November as terrible, and December as pretty terrible, according to newswire accounts.
The industry isn’t going to consolidate its way out of trouble, either, He dashed whatever likelihood there might have been of JPM hooking up with one of its struggling rivals, saying it doesn’t need a brokerage unit, and doubted the likelihood that two investment banks would merge. He added that JPM’s roll-up of the Bear Stearns assets have been harder and costlier than expected - a nice little morality tale for anybody who expected that salvaging the distressed assets of cratering banks, even at rock-bottom prices, represented a slam-dunk.
Pretty much coincident with Dimon’s comments, the market’s decline accelerated, with the Dow Jones Industrial Average’s loss tripling to greater than 200 points intraday. While JPMorgan’s loss in the session bulged to 10%, Citigroup (C) declined 8%, and Bank of America (BAC) fell 9%. |
M dub
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this depends on the bankruptcy judge but you should not expect more than a couple of pennies on the dollar if any at all. equity has first loss in the bankruptcy process, then preferred stock, subordinated debt, unsecured debt, senior debt then super senior.
if you want to know what the equity will be worth look at where the companies bonds are trading (if they have registered issues being traded). if they are yielding 20-30% or more most likely they are priced for reorg. Equity would be like a lottery ticket premium. |
samreez
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u own the stock as long as u still hold it. if the co. goes bankrupt u wud lose but not total loss as the co.'s asset will be sold and stocks re-valued, stock/share holders will get their portion of monies below the original purchase value. But it wud be differ if the co. later comes out frm bankruptcy, just hope that the value of ur stock is higher than your original purchase price.. It wud be even differ if u bought the stocks with loan.. now this is painful as u will be the one paying the interest for the loan.. |
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