Joel, the highest ranking creditor class that's paid less than 100 cents on the dollar is the only group that is entitled to vote on the plan to settle the bankruptcy. That group may, and has many times in the past, awarded something to a lower creditor class. For instance, it may choose to throw the unsecured creditors a bone in exchange for cancellation of any lawsuit. There's considerable value to all parties to put this disaster behind them.
The bankruptcy judge is likely to insist on negotiation if a lawsuit is filed, and may eventually dismiss such. Unsecured creditors should have considerable faith in their claim since they would have to pay lawsuit expenses and may stand to gain little, even if successful. The gain for unsecured creditors could go from +$15 million to zero.
There isn't now, nor has there ever been, any chance for recovery by common stockholders.
Recent rapid moves up in the 10YR should be seen as a wake up call. Short and long term rates could move against AGNC in a big way.
Control of the company is in the hands of the BOD. If they accepted a loan with dangerous terms, and later decided that the loan provisions prevented them from closing stores, it's their fault. How could a lender be sued for enforcing terms that may have been to the ultimate detriment of the company or unsecured creditors? Salus has no fiduciary duty to act in the best interests of either.
So you're saying that the hedge funds should be sued because they offered RSH a loan, but the BOD is not responsible for accepting it? Most retailers will not declare bankruptcy going into the holiday, but do so shortly after.
Markit, I reduced my exposure to JCP significantly, and am now using my holdings to cover the sale of calls. Optimism combined with weekly call expirations make this a good stock for that purpose. The past year has indicated that growth is likely to be very slow; however, EBITDA keeps increasing, so they will continue to be liquid. But it continues to be an uphill battle.
Headwinds are considerable. JCP has returned to its previous business model, but at substantially lower revenue per square foot. I once believed Sears would throw off customers to JCP, but now believe that the effect of a Sears failure is a negative. The reason is that Sears contributes less of a draw to malls that are also anchored by JCP.
Perhaps the IRS is choosing to reevaluate such spin offs because of the Yahoo request. The IRS has always had the option of refusing approval for any arrangement that is done for the purpose of avoiding income tax and has no genuine business justification.
You make an interesting proposal. Perhaps I should start a virtual corporation without any assets, sales, or employees. Since the stock would have a book value of zero, which is considerably greater than the negative book of RSHCQ, I could probably sell it for over $1 per share.
People don't understand that ISIS is going to change the politics of the Middle East in a dramatic way. There's also an increasing likelihood that the USA will have to intervene to limit their expansion, but it may be too late to completely destroy them. As a first step, oil from ISIS controlled areas will soon be embargoed.
If you look at the 10YR rate against the timing of QE in the USA, changes in the two coincide exactly. The 10YR rate drops when QE is anticipated, stabilizes once QE begins, reaches a maximum when the end of QE is anticipated, stabilizes once QE ends, and then drops.
The US 10YR is now being influenced by QE in Europe, and is tracking exactly with what it has done in the past because European bonds are a reasonable substitute for US bonds. Accordingly, the US 10YR yield will peak when the end of the Euro QE is announced, which will be the time to buy AGNC.
Long rates directly influence the book value of mREITs such as AGNC. The stock price will tend to follow book; however, anticipation of an even lower book value will drop the stock price below book. Anticipation of a higher book value will raise the stock price above book. Buying AGNC when the end of QE in Europe is anticipated will result in a buy at the lowest possible stock price.
There's no reasonable way that the US 10YR rate will be sustained at a high rate; that is, a rate above 2.5%. That's because of a continuing high level of imports from foreign countries depressing US growth and inflation. Such will continue for at least the next 10 years.
Lampert will continue to push the envelope to save his ***. The day may come that Sears is going to be the subject of a huge lawsuit, much larger than any yet filed.
There's no connection between a Radio Shack store and RSHCQ stock. The stock is only connected to legacy losses.
Oil traders don't seem to understand what is driving oil prices. Here are the rules:
1. OPEC controls oil prices. Any organization that controls over 30% of the production of a commodity has the ability to control prices.
2. OPEC desires to maximize the present worth of its revenue going forward.
3. OPEC is adjusting prices by adjusting production to achieve a price that maximizes the present worth of revenue.
For many years OPEC operated at a price that was too high to be sustainable because it encouraged too high a rate of growth of alternative energy sources. It's now trying to find the highest price that satisfies the condition that energy supply from all sources will not rise faster than demand. That level is probably between $70 and $80 per barrel at the current consumption growth rate. Oil prices will thus be somewhere between $70 and $80 by the end of the year.
So you're saying that JCP is likely to stay afloat?
Anyone who thinks that OPEC is being honest should have their head examined.
Saudi Arabia has been able to get all countries in OPEC on board because its strategy is recognized as the most beneficial for all. Saudi Arabia, acting as swing producer as in the past, is trying to find the oil price at which supply and demand come into balance, but most importantly, the price at which both will remain in balance. For many years, OPEC has kept prices so high that the growth of new energy supplies (of all types) have exceeded the growth in demand. If that continued, OPEC would eventually be faced with a sharp drop in demand, probably accompanied by a sharp drop in price, happening at a time that they are able to exercise less control. By precipitating a price drop now, at a time when supply exceeds demand by only a small amount, a greater problem in the future is avoided.
OPEC is pleased with the result achieved thus far because it has precipitated a decrease in investment in new supply, and an increase in demand. Going into this process, they were unsure of exactly the market reaction and their ability to exercise control. But at this time it looks like they have chosen the proper strategy.
By virtue of OPEC's share of the world market, they are effectively able to control prices. That's a given. Going forward, they will let prices rise at a slow pace as long as they continue to see supply and demand getting closer to balance. When the price reaches the level that supply shows a willingness to grow faster than demand, prices will level off.
At $60 per barrel, enough sources of oil have become unprofitable that supply is heading down. Continued growth in China and higher growth rates in India will continue to ramp up demand, so $60 does not satisfy the condition of longer term balance between supply and demand. The price will have to go to at least $70. At $70, SDRL will do well since its most inefficient rigs are being scrapped.
You're buying into MORL too soon. Wait until interest rates stabilize at a much lower spread, then buy and take advantage of spread widening. MORL could easily hit $10 within the next year.
I completely agree. After several years of stable oil prices, the risk attached to new production is being underestimated, resulting in marginal investment. With a major swing in prices, even with a large increase in oil prices, the risk going forward increases. That will reduce the willingness to invest in marginal oil and gas development, and also alternative energy sources.
It seems to me that the talking heads have not been as focused on the unusual level of agreement among members of OPEC in their last meeting. The Dec 2014 meeting was characterized by disagreement on the part of countries needing a high oil price to pay ongoing expenses for running their country. They obviously didn't feel confident that the new strategy was going to pay off. In the recent meeting, the same countries, including Venezuela, were supportive, so they MUST expect higher oil prices in the near future.
klumps, I agree that we're on the cusp of some huge and damaging (to the AGNC stock price) volatility. We probably; though, disagree as to the drivers.
Markets are on a hair trigger as regards bond prices. Warnings of liquidity problems abound. Announcement of the withdrawal of the ECB from QE will trigger a damaging spike in the market trend toward higher yields, perhaps taking the 10YR to 3.5% or 4% before it falls back to 2.5%. Whats coming will make the 2013 taper tantrum look tame.