We had a nice first week of trading, but the second week wasn't so kind. I was hoping we would end up at least a few percentage points, but instead we ended in negative territory, and I'm not sure why. Were there any downgrades to the stock?
Yep. I think a lot of the AAMRQ holders have realized that there's not much they can do except sit and wait on their shares for a while. The day traders also may have gone elsewhere.
What do you guys think of the AAL 2 year call options? I believe that this stock is going to go up into the $30+ range in the next two years. As a former AAMRQ owner, I decided to take my first AAL stock disbursement and convert it into Jan 2016 $20 call options. I've never messed with options before, but the $20 strike price seems low enough to offer some safety, as does the Jan. 2016 expiration date. Have any of the rest of you been considering these LEAPS?
If you had 5,000 AAMRQ shares, and you got an initial disbursement of 338 AAL shares, you'll probably get somewhere around 625-775 AAL shares from EACH of the next 4 disbursements.
Summary: The leadership at American is experienced, since they successfully navigated the US Airways/America West merger in 2005. If they can obtain similar results this time around, the stock will likely see $70 sometime next year.
When I purchased AAMRQ, I felt that I was purchasing a stock that in the short term might appreciate ~25% if the merger happened - which I was fairly certain it ultimately would. I'll admit that I was surprised by the "holding period", since I hadn't run into this in a merger situation before. However, it ultimately makes no difference at all, since I was expecting to hold for a year or two. Forecasts show airline stocks doing well into 2014 and 2015 as a whole. American may even do better, if the synergy cost savings can be realized. I think it's a better than average stock to hold for a couple of years. People who are wanting out NOW seem to be in a rush to give up what is likely at least a 25% gain, and possibly a 40% or 50% one. It reminds me of those people who give their car gas just so they can slam on the brakes and spend more time waiting at the traffic light.
Despite the indexes going in the other direction this week, American stock gained just over 8% in its first week of trading. This really shows some strength and interest from investors.
Obviously, year to year or month to month comparisons are better, but this first week has definitely made me pleased that I purchased AAMRQ shares at about $7, and have decided to hold on to the new American shares for at least 2014.
How are you feeling about it?
I bought because after spending about 20 hours researching the company and the merger, I felt that the chances of the merger happening were greater than the market was giving it credit for. I bought because I knew that if the merger went through, I would be kicking myself if I hadn't invested any money. When the chances of the merger going through increased, I bought even more.
I also bought because I think that a company like this in a competitive industry, coming out of bankrupty (but still reporting very profitable operations while in bankruptcy) has gotten rid of some legacy debts and recurring costs - made itself a little leaner.
Of course, there is the "synergy" savings that the new company has us all looking forward to, which we hope will translate into higher profits and stock price.
I'll admit that I could use some better sources of detailed stock info to use for research. Care to list some of your favorites, so that we can add them to our list of resources? Thanks!
Ha, yeah, sometimes I have gotten on here and it is pretty much split 3 ways between pumpers, shorters & spammers.
It's probably because I'm coming from the completely unregulated world of Usenet, but I've always felt that as long as the post is primarily about the main topic (in this case, American), anything should be fine: questions, answers, thoughts, misgivings, etc.
A post just talking about your dog having ringworm, for example, shouldn't be there. Neither should posts saying "hey, I made lots of money on xxx.xxx website...." However, if someone wants to have an open discussion about ANY aspect of the company in question, I think it should be permissible.
One thing that I have found amusing lately is the followup messages whenever a news article about the merger has been posted recently. Probably 80% of the folks posting are going on and on about the evils of creating our new "monopoly" on air travel in the USA. I'll start worrying about that when there is only 1 legal carrier.
Relying on message boards and calling it due diligence is an absolute joke.
Granted, but many personality types seek consensus on major decisions. A lot of folks don't know anybody personally who gives a hoot about investing, so they end up seeking consensus and information here. I tend to do more lurking and reading than anything.
I started out on the Usenet Newsgroups when I first got on the Internet back in 1992. I still get on several of the Usenet groups occasionally, but most of them have been taken over by spammers.
Anyway, I never read the prospectus before investing in AAMRQ. I simply read a lot of articles about the company, then got on here and looked at the specifics - debt, profit reports, etc. Then I read numerous news articles & such, until I had a gut feeling that I'd be kicking myself later if I didn't invest. I bought in at just over $7, so I think I've made about 70% in a month. (good return for me, since I usually invest for 2 years or longer)
I have to admit that the "holding period" took me by surprise. I.E. - I thought the 120 day conversion was for bond holders only, and did not connect the dots to figure out that as an AAMRQ stockholder, I was technically a holder of debt to be converted into stock in the new company. In the past when I had stock in a company that merged, it tended to happen on day 1 of trading in the new company. Anyway, it really doesn't matter to me at all, since I invested with the intention to hold for a year or two, and see how the new airline does. Unless fuel prices go up, I think they can really increase savings (& thus profits). I think AAL stock should likely return 15% to 25% over the next year or two.
At this point my only remaining question is this: when will Yahoo open up the AAL discussion board?
I've read that, ultimately, how this stock does over the next couple years is all up to whether the price of oil goes up or down, since that is a huge cost input for the airline. I've been reading various oil forecasts, and they seem to range all over the place from around $80 to $120. There doesn't seem to be a consensus that I see. Anyone have thoughts about this? I'm not talking about trying to guess the price in any given month, but just a general price trend per year.
Now that the lawsuit is history, and the merger is a done deal, why is this thing still dropping when the value is supposed to be around $13? I would think it should pretty much level off at a price close to (but a little bit below) the eventual redemption price .... but what do I know, I guess.
I added a fair sized batch of these to my Roth IRA back when they were about $14 each, after having read articles by an analyst saying that they would not suspend the dividend since so many banks held them. The same analyst said they were a very safe investment, since they were backed by the government. Instead of getting a nice dividend over the past 5+ years, I watched as 95% of their value evaporated.
Since it was a Roth IRA, I couldn't use the losses to any tax advantage (balancing out gains), and so I held on to them over the years. I was frankly quite shocked to get on here today and find that the preferred stock was going for about 9X what I had expected!
After reading some news reports, it looks like we are perhaps a year away from completely paying off all of the money that we got from the government in the form of a bailout. Is that correct?
Once that is done, will the preferred shares that I bought finally no longer be retroactively called "Junior Preferred", and start getting a dividend again? Or is the government planning to simply keep all of the profits for themselves?
I am considering adding this company to my Roth portfolio - maybe 8% of the total. It looks like an out of favor (perhaps oversold), profitable company that is selling at less than book value, and for significantly less than the stock price has been in past years. My biggest question is why so much debt? If they took the cash on hand and paid off debt with it, it looks like they would still have about $400 million in debt. I'm wondering if this is good debt that will lead to improving profits, or "bad" debt that they will have a hard time paying off.
I'm NOT interested in short term guessing on whether this will go up or down today, next week or next month. I AM considering buying and holding for at least 2-3 years to see what happens longer term. However, the debt is a little off putting for me, and I was hoping that some of you long termers here might be able to shed some light on the debt issue for me. Thanks!