I am reading we are loaning you enough money to liquidate at market prices, but liquidate quickly and pay back the tax payers or we take you over. I think we are screwed. Moral hazard is being avoided. They are not going to arrange a bailout of the common shareholders. May trade up on open (I am getting out), but I have a feeling this is going to drift into an abyss. Or am I just totally wrong?
Depends on the ability to repay, less than $5.00 was BK pricing, no longer an issue, should be interesting. Why would anyone short a $4.00 stock, your gain is only $4.00 where your risk is 3 or 4 times that.
Not sure if this makes sense, but here's how it looks to me:
10.08B Market cap with 2.69B representing 100% of shareholder equity at market close. After the Fed 79% stake is issued, the 2.69B shareholders now represent only 21%, so the diluting effect should push the stock price under $1.
The Fed bought the position to allow time for the laws to be changed to allow further time for AIG to access the discount window. The Fed can now only assist financial industry in discount window and now AIG insuracce giant. This stock is going to explode to the upside once they figure this out.
Stop listening to idiot shorts. The Gov't loaned 85 bill. Today the market cap was 9 billion. If you take 85 bill for 80%, then 100% is worth 100+ bill, which means the 20% common stake is worth 20 billion. Add in the 9 it was worth today, and the total is 29 bill, 3x todays price, or about 12 per share. That is what it will be tomorrow.
I am not sure I trust all the other longs on the board. It seems they have the same false hope the FRE, FNM, and LEH longs had. It is the belief as you jump from a 100 story building you are somehow going to survive. I believe the Government just forced a private company to liquidate, but in an "orderly fashion". How can this be good for the common shareholders. I am long, but feel the other longs are in denial. How am I not wrong on this? It just does not make sense the stock will hit $10 or even $5 tomorrow.