And you will see why the stock is at these levels. Debtholders will own this one.
While it may not be the complete no-brainer that ETM was at $.75 in November 2008, at this price, Emmis would definitely appear to be a diamond in the rough, IMHUO**
** in my humble unaudited opinion
Pretty impulsive of you, based upon what you were saying yesterday, no?
This is a great speculation at 46 cents. Simply because, it is very hard to see them going Ch.11 in the immediate future. And if we merely get through to January, a "bounce" to .80-1.10 seems more likely than not, to me.
Your ONLY reason is the impairment charge. As you indicate, this was due to the temporary decline in radio station values in comparison to what they paid for the stations. Some would say EMMS paid too much for the stations relative to the cash that they can generate, and now they have the debt to deal with.
Maybe there is hidden value in EMMS, maybe not. If things are as positive as you indicate, then the value is in the debt, not the equity, which has imploded for good reason.
Can money be made trading EMMS, yes. Can it be made investing in EMMS with a longer term horizon, the verdict of many "astute" investors is no. Time will tell.
The ONLY reason the company reported losses in the last three years was the $566 million in (non-cash) asset impairment charges that were incurred due to the temporary decline in radio station values in comparison to their acquisition costs. Unfortunately, as station prices rebound, these asset impairment charges are not reversed, which I would argue is patently unfair, and but one of the many deficiencies in generally accepted accounting principles.
Due to the non-cash nature of the asset impairment charges, the company reported positive cash flow from operations over the last five years, which for most astute investors is the true measure of a company's value -- not some contrived measure that happens to be "in conformity with generally accepted accounting principles."
People making investment decisions based on what they read on a message board is what I find funny. To suggest indemnification for losses because a posting made someone sell too early is even funnier. And by the way, I said "likely". I did not say that they are going to file.
The stock trades under $1.00, EMMS has had negative net income for the last 3 years, a company that was going to be part of a deal to take EMMS private bailed. Which one of these things does not sound like a company that is in trouble?
The amount that Yahoo! Finance is showing for total stockholder equity in the link referred to (see below) is completely wrong. Yahoo! Finance is showing total stockholder equity of negative $179 million, when the total stockholder equity is actually negative $38 million as of Feb 28, 2010.
Clarification: While the total stockholder equity is indeed equal to negative $38 million, preferred stock is equal to $140 million, making COMMON stockholders' equity equal to negative $178 million. Approximately $566 million in asset impairment (non-cash) charges were incurred in FYE 2008, 2009, and 2010, causing the entire amount of negative shareholder equity, and wiping out an additional $388 million of common stockholder equity.
Oh, is it really that simple. The CEO tried to buy out the company at $2.40, and the stock is now 73 cents. Meanwhile, radio revenues are only BETTER than they were when this deal was first announced. It's not as clear cut as you think it is, that the banks are going to own it. I still think the market is overly discounting the stock, and ignoring the possibility that one way for Alden to settle with Smulyan is to come back in and finance his going private transaction, and maybe the pfd. holders will go for a somewhat lower price, since that stock is down, and maybe the common holders will go for $2, since that price is down. I would hardly be surprised to see that happen. I think this is a good speculation at current prices, but since it broken down from the 76-82 cent support range, I'm waiting for lower prices before I increase my position more.