In recent filings with the SEC, Elliott Associates L.P. reported that they signed an "investment agreement" with RRTS, which resulted in several significant items :
1. the previous debt of RRTS to a credit facility is extinguished. Also, RRTS has no bonded debt. 2. several series of preferred stock, in aggregate value approximately $540M was issued by RRTS. 3. Elliott Associates L.P. (and Brockdale Investments L.P.) are the only owners of the newly created preferred stock. 4. As expected, all series of this newly created preferred stock is senior to all existing common stock.
I'd like to make a detour to what I think is pertinent information from Chapter XL ("Capitalization Structure") of Graham & Dodd's "Security Analysis" (the 1934 edition). Based on current price of the common stock, RRTS has a capitalization of approximately $280M. However, as G & D point out in Ch. XL, such a capitalization structure is "top-heavy" in their parlance, meaning that the value of the senior securities (i.e., the preferred stock) significantly surpasses the value of the common stock. BTW, G & D also refer to a "top-heavy" capitalization structure as "speculative". G & D note in that chapter that such a capitalization structure "may give the common stock a definite speculative advantage." (p. 466 therein).
Close to the end of Chapter XL, G & D comment regarding the purchase of common stock from a "top-heavy" business in this way :
"In making such purchases, partiality should evidently be shown to those companies in which most of the senior capital is in the form of preferred stock rather than bonds. Such an arrangement removes or minimizes the danger of extinction of the junior equity through default in bad times, and thus permits the shoe-string common stockholder to maintain his position until prosperity returns."
Regarding the above quote from their text, isn't this an exact description of what has occurred with relationship between RRTS and the Elliott/Brockdale group ? That is, no bonded debt exists, but there now exists preferred stock which is valued significantly more than the outstanding shares of common stock.
G & D provide examples in that same chapter of companies whose common stock price was greatly increased because the capitalization structure was speculative or "top-heavy". I should also mention that Elliott Associates L.P. and a few other investment groups have made significant purchases of RRTS common stock. QUESTION : Have these purchases of common stock been made in anticipation that the "top-heavy" capitalization structure will drive a strong increase in the price of RRTS common stock ?
I ask for your comments or constructive criticisms regarding RRTS and its "top-heavy" capitalization structure. Also, would greatly appreciate comments on the applicability of G & D's insights, now 80+ years old !
Do you think this thing is done selling? Showing us a buy signal now on RRTS? Do you guys find it difficult to know when to buy or sell something? I prefer to get my stocks from awe_some_stock.s.
X axis : Stocks Price Correlation Coefficient Y axis : Quantity of stocks Sep-2016 1,000 Day Parameter 4,338 NYSE Stocks Price Analysis This stock mode of correlation coefficient is 0.6 In other words, the correlation coefficient of the other stocks
Loan extension is headline. Later headline about Elliot has taken a sizable position. Looking further into what happened today should investors be focused on today's real news?
* CFO is stepping down
* The company said that it has delayed filing its restated financial statements and its 2016 Form 10-K with the Securities and Exchange Commission until after completion of the long-term loan amendment.
Something smells about management and just feeds the lawsuits new life
The scenarios are quite interesting at current levels for RRTS. a.awesomestocks just allerted a new stock - it beats having to dig online yourself for new stock ideas.
Should i invest?
destroying value like no tomorrow. Drivers get put OOS for fused tail lamps, but these geniuses have no clue what happened for two years! In the the conference call they said "its an ongoing investigation" ! haha. Scary ! no end in sight with these incompetents. A $200 Million writeoff. Pretty nice round number.
Has anyone tried contacting IR? I got the run around from Marilyn Vollrath and CFO pretty bad. Maybe they think im a short seller or something. But has anyone else had luck at RRTS answering their questions?