Some one is intentionally trying to keep the stock price down. The only explanation that makes sense is that Genco would like to see as low a price as possible prior to making a bid for the company, and they are in some way orchestrating the price pressure. I think this price manipulation presages a bid, maybe in the next week or so?
The stock spiked up 3 times on heavy volume and each time somebody pushed it back down. Almost as if someone is buying in anticipation of the long-awaited offer from Genco, while Genco, or their agents, are working to keep the price down so any offer looks more reasonable. Probably just my over-active imagination, but could we see an offer soon?
I guess we now know who the massive seller in ACCO has been. With the filing of the quarterly holdings reports, Fidelity disclosed that it sold 9.7MM shares last quarter and it presumably sold its remaining 2MM shares in October. With Fidelity out of the way, and with the strong earnings reports of the last two quarters, it is no wonder the stock would begin to lift.
Congratulations to ACCO for initiating a share buyback program and taking advantage of the share overhang. My guess is that they bought 5MM shares or so at an average price of around $7.50. Just a guess.
Probably the tail end of a sell order that's been going on for a few days. As the seller gets close to finishing the order, he is likely to get more aggressive, if only to finish the trade. Also he doesn't need to protect what had been a larger position. Stock will bounce back when the seller is out of the way.
The shorts are in trouble. How do you cover a 16 million share short position when the stock jumps 4% on volume of 200K shares? Its their own fault. Anyone who would short a stock with a 20% free cash flow yield is asking for trouble.
That position does not give him any leverage, especially since you seem to believe it is worthless. It is certainly not a controlling stake. His 10% stake gives him no leverage in the talks that have already been ongoing for several months. And it is laughable to suggest that he, as a minority equity holder, has the ability to take the company into BK. I think management and the creditors would find your position ridiculous.
I think raging bull has the correct take on this. Based on my experience (I have seen this movie before) the equity will be worth $1.50-$3.00 in the reorganization. That is the bet Koshla is making.
"Shareholders will be ZEROED out." "Khosla buying shares now is cheap and gives him leverage for long term gains." Say what? Do you read what you write? Why would Khosla buy shares that will have no value? How does owning worthless stock give him leverage? Your post is nonsensical.
The debt repayments were accelerated since they blew the covenants. That is the problem they are facing and the reason for the BK filing.
I may be wrong, but don't they have a debt payment due today or tomorrow, in which case they need to make some sort of announcement.
Don't know about the timing, but I think the likelihood is that they file a prepackaged BK soon. But I also assume that the shareholders will get to keep a share of the equity. Depending on the details, the stock could go up on the news (or down, although I am guessing up).
I'm sure bidders have already been solicited. In fact, I think we have to assume that GNK has put together a prepackaged BK and they are out soliciting approval from creditors. With so many parties involved, word of the plan is undoubtedly leaking out. With the stock going up, the most likely conclusion is that the plan treats the shareholders fairly well.
I was more concerned with the pattern of selling.You don't need big volume to periodically hit the stock and drive it down a dime, and then step away. But maybe that's just me being paranoid.
I think the debt holders are working hard to keep GNK's stock price down, hoping to get a better conversion price or warrant pricing in the reorg. Clearly some big sellers who seem more interested in bombing the stock than in working out of a position in an orderly fashion.
My prediction: debt holders will take converts or warrants in exchange for waiver. Shareholders will be diluted but not wiped out. No BK, too costly for everyone. I guess we'll know in two weeks or so.
Institutions were net buyers of almost 3 MM shares in Q-4 . Late day and strategic selling pressure, which has become increasingly common,was not coming from the institutions. Oddly enough, In spite of institutional buying, short interest remained flat. Just another reason to believe that there is a lot of naked short selling. Who else can be providing shares to institutional buyers who already control almost 100% of the outstanding shares? Actual short position could be huge. Much bigger than the reported short position which is already very large. Not sure what could initiate a short squeeze, but unless ACCO trends toward bankruptcy (which is certainly not happening) a short squeeze seems inevitabel
BTW, somebody is short a lot of this stock and is working hard to keep the price down. Notice how frequently a seller comes in to hammer it on the close. My suspicion is that there may be a lot of naked shorting going on. That shouldn't be a problem over the long run if thecompany can keep generating cash and deploying it wisely. but it is frustrating on a day like today.
I agree. They should generate enough cash ($200 MM) over the next 16-18 months to reduce debt to their target level. From that point forward they will be generating about $1.20/share in FCF which could be used to buy back a lot of stock if it is still at this level, which I doubt it will be. The key to any FCF story is what managment does with the cash. Buying back stock at 6/share gives them an immediate after-tax 20% return, even assuming no growth, and is hugely accretive to earnings.
Hearing Boris talk about acquisitions on the earnings call makes me a little nervous. I don't think they could make any acquisitions that will give them the same return as buying back their own stock at current prices. But I agree that paying down debt should be their #! priority.
Your $12 target sounds about right although I think it could be higher.
Obviously they aren't generating enough cash to make the loan payment. Nobody disputes that. But with rates at current levels they can pay the interest The question is can they resolve their debt payment problem thru debt renegotiation, asset sales, etc without going through BK. The longs think they can. Time will tell. The concern I have is how much it will cost in equity dilution to get a waiver. I am betting that any negotiations will be successful enough to result in a higher stock price.