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MOTORS LIQUIDATION Message Board

  • queentaker queentaker Aug 19, 2009 7:19 PM Flag

    Options only drives price

    Since there is no underlying business to drive prive movement, there are only forces at play
    1) Price that will max profit for options writers
    2) Long-term value will drop to zero.
    Hence, I predict that stock price will be
    $1 in Aug
    $1 in Sept
    $1 in Dec
    $2.5 in Jan of 2010
    and then migrate to zero. I know there are some options expiring in 2011 but there are only a few and it is too far out there for most people to care.

    This race is otherwise over.

    QT

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    • Not saying either, though either would work to get more shares shorted. Just that plenty of stock is out there, and the economics seem compelling to have as much of it lent out as possible.....but there doesn't seem to be much available - and the published short interest (on the pink sheets site) is quite modest given this apparent easy arbitrage.

      Something is really weird. I don't believe the NOL shell company is practical, but I'm no tax attorney. That would be a national scandal, and too many interests would be aligned to make sure that doesn't happen, even if it had a chance to happen, which I don't think it does...recalling some very informative posts on this matter immediately after the GM BK.

      Is it Occam's Razor here - where the simplest solution is just that people are stupid and are buying a worthless stock thinking it is something else entirely??

    • It is even more baffling to me that day (I think the 8/11th), that the stock went , in very high volumes, from 1.20 to 0.7, with absolutely no news or events!

      I had an earlier theory that the NOL which the Judge's trade restriction was trying to protect, would be "unprotected" and come back to the BK company, and after all assets were given to the creditors, the empty shell of Motors liquidation co would have no assets, no debts and a NOL of almost 20 billion dollars. Whomever controlled that shell , could sell it to someone that has a legitimate profitable business so they could reverse-merge it and save a bundle. That's why the judge put the restrictions. However, if someone put together a group of 15 people, each buying 26M shares, they don't have restrictions, and collctively control the shell, capiche? The 64k question is if someone gets control now, would the NOL come back to old GM? In my opinion the answer is yes, because the restrictions apparentely are still active.

    • <If the thesis is that hedgies, etc., are purchasing this so they can lend it out at 100%+ rates, then why is there so little available to short?

      That is their business model, after all, but they aren't providing any of the inventory.>

      Don't you mean the brokerage firms make 100%+ rates lending the stock owned and held by their customers in margin accounts, not hedge funds themselves who hold the shares? Or are suggesting that the hedge funds are entering into private, written contracts to allow other entities to borrow their shares held at their prime brokerage, taking the lending opportunity away from the brokerage firm itself?

    • By the way - -

      If the thesis is that hedgies, etc., are purchasing this so they can lend it out at 100%+ rates, then why is there so little available to short?

      That is their business model, after all, but they aren't providing any of the inventory.

    • I'm with you. I don't think there is any concentration of this stock, so the 4.5% limitation doesn't mean anything.

      Somebody above talked about buying shares, lending them out and purchasing puts as protection from the plunge to zero. Maybe that is a broker move - but the retail guy can't open any new options positions.

      Can't explain the massive volume other than by fast trades, where the computers are buying & selling to one another. Even on the pink sheets (somehow). It is not net retail interest. I've seen that with some other small stocks. The volumes don't make any sense, and are not a harbinger of anything.

      But if this pricing is purely a creation of the options, it does not seem to have any historic precedent - as per the LEH, WaMu and other examples cited before. Those stocks went quickly to their ultimate value despite having active option chains. This one continues to levitate.

      What is so unique about it?? All that short interest opportunity doesn't have a natural offsetting long interest (or shouldn't) because the intrinsic value of the common is 0.0000000

    • It is a valid point, it was my first thought. After creading it all, I believe that the NOL has been already carried to the new GM. This is not an order forbidding trade. It conceptually similar to the restriction that 10% shareholders get on any publicly traded company, only that instead of filing a form 144 with the SEC, they are filing a weird form with the court, and it takes longer.

      Alas, nobody has filed with the court to get permission to trade under these restrictions. Is going to zero, why not try?

      I wonder how many shareholders out there have more than 4.5%; On previous SEC filings (pre-BK) there was only two groups with more than 5%. Even if we assume that 150M shares are frozen, there's other 400M long shares that are unencumbered....

    • Guys,

      Read the bankruptcy documents (I've posted on this issue numerous times): Any "Substantial Equityholder" of at least 27,000,000 shares of GM’s common stock (“GM Common Stock”) (representing approximately 4.5% of all issued and outstanding shares of GM’s common stock) on June 1 is restricted from buying or SELLING any shares without the Court's permission ("Stock Trading Order"):

      http://www.motorsliquidationdocket.com/stock.php3
      http://www.motorsliquidationdocket.com/stock_5.pdf

      There is no efficient market in MTLQQ shares as a result -- a huge supply of shares are off the market and not available for sale, thanks to the Obama Administration's tactic of making the net operating loss carryover an asset in the 363 sale. READ the document to obtain better understanding of what I mean.

    • Thank you very much for the education.

      What is curious, is why it appears to be the first time a dead-carcass stock goes through this; We didn't see that happen with other bankrupted companies, such as WAMU and Lehman. I'm sure that options played a role in their trading too, and they went up/down, much at much lower leves; but I don't understand why GM's old dead body. It seems that the key is the price of the march 2.50 put.

      Thanks again.

    • What I don't understand is this.

      There are a grand total of 550000 open contracts for puts all on the money. That is a total of 55 million shorts. Add that to 38million short positions on the stock, and you have approximately 100 million short positions in total.

      I have not done the math for the calls, but at 1 they are all out of the money.

      Please educate me, how that can move so much the price and volume, and the options volume is so little?

      Disclosure: I'm long september 1$ puts

    • What do you see in Jan to make your estimate higher then?

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