NOLs are not a guaranteed to survive BK. It's $1.7 bil in losses that that can be used to offset future gains. As a tax savings, it's only worth $600 mil. Maybe the creditors will just ignore it.
Your $4.17 is based on the existing float and is equal to a market cap of $1.7 bil. This same market cap can be achieved by giving large quantities of stock to creditors. In essence, a massive dilution. Existing longs will lose out.
VRX premiums are still very healthy.
But the super premiums are found in SRPT. Just before its AdCom last week, I sold the weekly $11.50 put for $3.00. And that was when the stock was trading at $14.00.
Buffet and Munger run a clean ship and make billions by allowing good companies prosper over time.
Pearson is different. He is more like Gordon Gekko (Greed is Good). He didn't care if raising prices on life saving drugs distressed the customers. Fat man would only hire amoral testosterone-laced managers that would throw their own mother under a bus if it insured numbers were met. Hopefully mom heals from her injuries. She got her just desserts for raising a child who does not know right from wrong.
Now we have new management. But VRX's corporate structure is a mess. Hopefully, they can turn things around.
On Thursday with no 10-K published, a smart trader could have loaded up on the VRX $35 options expiring today. Back up the truck. It was a sure bet on a $5 run up.
But it did not work out that way. All that option premium wiped out!
WBA will hurt VRX. Philidor was slimy, but it bought in the money. WBA will not change prescriptions to VRX products. They will not game the payors to maximize $$$$$. It is tough doing business when greed is no longer good.
There are only three time slots VRX can release it's long awaited 10-k. Tomorrow am, Friday am, and Friday pm. The last slot is very bad for investors as it means VRX has something to hide. Perhaps a bad note from the auditors.
My guess is tomorrow am before the bell we will see the 10-k. The Senate is behind them now so clear sailing.
If not, it will be Friday am.
If the 10-k is not released by Friday am, it implies a Friday pm release. VRX will sell off on Friday due to this.
Only six months ago, VRX was governed by a "greed is good" mantra. Managers were given numbers to meet and VRX really didn't care how the numbers were achieved. If anyone showed mercy or compassion for patients or payors, they were fired on the spot.
But times have changed: Person and group went to the Hill today to eat crow. "We are sorry for the price increases." "They were wrong." Blah Blah Blah.
All three VRX representatives sucked it up and did what they had to do in front of the Senate committee. But for sure you know they wished they could go back to "greed is good." That is the only way to make money.
Now VRX has too much debt and they can't raise prices. Not fair.
LOL Too funny for words.
Every time there is a BK, the longs cite three events that will save their butt: 1) a white knight such as India, 2) an equity representation on the BK committee and 3) the value of NOL.
It's like watching an 18 yo boy chase after girls. It happens all the time.
Longs should check out all the other BKs in recent times. In no case as NOL made any difference. In no case as equity committees done anything. And of course, a white knight never buys BK shyt.
I thought the retail longs were going to initiate a short squeeze? Did you notice that the trading today was uneventful? Well, I got to cover my entire short. There was nobody around to squeeze me.
If I can cover with no problem, anybody can cover.
Can you name another case where the debt holders take a haircut and the equity gets off scot free?
The nasty side of BK is to make debt holders "whole" out of the hide of stock holders.
The clouds will clear when the reorganization proposals are tabled. We will then see how under water SUNE is. Given their reckless debt fuel growth, I think the numbers will shock longs.
Where is it written that a short must cover in order to book a gain? When the stock is cancelled, the brokerage will zero out the borrowing and register the gain.
SUNE is not a hard to borrow stock. It cost zilch to maintain a short position..
Calls are cheap. A short can buy Jan 2017 $0.50 calls for 3 cents per share.
But if there is no short squeeze, the short can buy to close at $0.22 per share.
The point is that a short squeeze is not possible.
Longs are advancing many arguments why SUNE will survive and thrive. The BK process is slow moving and it will take months to know the real finances of SUNE. Once known to all, the struggle will be between the creditors on who gets what. It's like fighting for the floral arrangement at a wedding dinner. In the end, longs will be wiped out and life goes on.
Shorts have already won. They have the long's money and are waiting for the cancellation call. In the meantime, they don't have to buy to cover. Many foolish longs think they can cause a short squeeze. Not going to happen. Longs can lock in their gains by hedging with calls. Or they can slowly buy back at $0.20 ps.
I know longs hold on to a glimmer of hope. They should hold on to their shares and wait out the BK process. Bondholders saw their holdings priced at 10% of par in recent trades. They too hope to regain some value. In the BK game, the lifeboats are used by the bondholders first and if any room is left, longs are allowed to be saved. But the 10% valuation tells you that there will be no room for longs.
Concerning Einhorn selling a portion of his stock: SUNE made the call for BK a week ago. All longs including Einhorn had a chance to sell their holdings. Why did you not sell?
Many longs are hoping they survive BK. The odds are very high against this happening. Why? BK is caused by debt crushing the company. The BK process makes all the debt payable. Very few companies can repay all their debt at once. Given the way SUNE has been operating, it is impossible for SUNE to make all its creditors happy. Creditors will not like taking a bath so to compensate, they are given ownership of the company.
Creditors do not like BK for the outcome is not known. Their money is tied up for years until the BK court allows exit from BK. If there are squabbles between creditors (very often), the process is extended. Therefore, if there was a way for SUNE to not go under the BK knife, it would have happened.
Longs are in for a long battle in BK court. In six months, it will be very clear that no equity is left. Once this happens, postings on this Board from longs will diminish. They will be replaced by those who will treat SUNEQ as a penny stock.
BK for SUNE will be a long drawn out process. The symbol SUNEQ points to the existing stock and will stay this way until the company emerges from BK. At the end of the process, SUNEQ will be cancelled. New stock will be issued with ticker symbol SUNE (most likely). If the company goes private equity, no stock is issued.
SUNEQ still lives and the emotions of longs will be on a roller coaster until BK ends. Once the stock is cancelled, the drama is over. But shareholders will continue to trade the dead stock for years. Check out Blockbuster who went out of business in 2010. It's trading stock is BLIAQ and continues to trade. It even has a YMB.
In the GTATQ, a retail investor tried to press the equity case in the BK court. He was his own lawyer and did not do a good job. But his failed efforts did not affect the outcome. GTAT longs got nothing. BTW, GTAT's bankruptcy pleading also showed more assets than debts. This is also true with SUNE and the outcome will be the same. Longs get nothing.
Not too bright are you? Shorts never have to buy to cover. When the stock is cancelled, it is kaput.
I am seeing lots of posts from longs who claim shorts are trying to scare them out of their shares at a cheap price. The last price for SUNE was $0.33 ps. Longs have lost a lot of money. If a retail long is scared off and sells tomorrow at $0.05 is it the fault of the shorts? Is it not true that most of the losses in SUNE are already booked by the longs?
Not good logical thinking by retail longs. Let me make this easy to understand: Shorts have won; longs have lost and lost big. The battle is over. Shorts will count their profits. Longs will find a way to look cool now they have to carry a bag around. It is not being called a bag holder; but it is what it is.