10
Spotting those zombie stocks
Zombie stocks.
To view this content, Javascript must be enabled and Adobe Flash Player must be installed.
TEXT OF STORY
TESS VIGELAND: The movie "Zombieland" comes out this weekend. You should pay attention because it gives rules for hunting the living dead.
From the movie "Zombieland": Welcome to Zombieland. Rule number three: Call me a goody two shoes, seat belts. It's gonna be a bumpy ride.
And as with just about everything Hollywood -- you can apply these lessons in your everyday life. Especially when it comes to investing. You know, of course, that huge companies like Washington Mutual and Lehman Brothers, they're dead. But their shares still lurk around some trading floors. They're called "zombie stocks."
The SEC doesn't force a company to stop trading until bankruptcy is done. And that can take months. Meantime, shares go up and down as if the company's still alive.
Last fall John Laine put about $3,000 in zombie stocks. He called it his "lottery" portfolio, and a week ago, he cashed out.
John Laine: I sold it all for about $13,400 -- 470 percent profit.
Be warned that most of the undead do not rise from their ashes. But Berkeley finance professor Terry Odean says some grave robbers can't help but think these stocks are a great deal.
Terry Odean: A company that was once powerful and vibrant, there will be some investors who just can't believe it's dead.
Rest assured, and in peace, they are. And how do you tell a zombie company? Look for a "Q" after the stock symbol. And then, run for your lives!
Nellie McKay, singing "Zombie": Do the Zombie, do the zombie whoa, yeah...
I would continue to buy.. it was hitting around 40 cents a share a month ago, and now it has fallen back to around 20 cents. I still think it is an amazing bargain, and will have value, just like Leahman Brothers. There are still assets there. I am certainly NOT going to put much at risk, but a few grand.. sure, it is a reasonable risk. :-)
PGPDQ --> From $0.14 to $7.90
VRMLQ --> From $0.01 to $17.00
SPSNQ --> From $0.01 to $.52
"Look for a "Q" after the stock symbol. And then, run for your lives!"
Conventional wisdom will get you only so far in life, and in investing it is the key to mediocre returns (ie. barely beating inflation). I guess some people will never understand:
WAMUQ
Assets 7.7 billion
Liabilities 8.3 billion
-IRS tax refund due 3 billion
-Trust Securities will be returned 4 billion
-14 billion dollar lawsuit against the FDIC
-25 billion dollar lawsuit against JPM
Run for your lives? You will regret that advice :-)
Make an article full of poo and watch all the people that follow the real issues with this zombie stock that has made me over $20,000 in a year off of $3,000...laugh at you. haha, But your boss will say way to stir it up and get us readers. Did you also know this is the same article some other moron wrote 2 weeks ago when the stock was up 4000% from 2 months prior. Go WaMuQQQQQQ
How can you identify an uninformed journalist? Look for sweeping statements like “And how do you tell a zombie company? Look for a "Q" after the stock symbol. And then, run for your lives!â€
Tess, I suggest you do a little research before again misleading people with such gross generalizations. FYI, the “seizure†of the “failed†Washington Mutual Bank was in fact a taking under the 5th amendment (look it up). The finest bankruptcy attorneys (Weil Gotshal) and the finest litigators (Quinn Emmanuel) are prevailing in multiple suits against the FIDC and JPMC in Delaware, DC and Texas (being moved to DC). These firms do not engage in frivolous actions. They accept cases with significant merit and proceed to win them.
Since NPR prides itself on accuracy, I suggest you never again submit such a shoddy piece. If NPR maintains any standards at all, it would be your last.
It is easy to dismiss Washington Mutual as a "zombie" stock. It is much more difficult to read the court documents, analyse case law, and buy accordingly. Here's a little nugget from a recent court filing:
"In March of 2009, certain of the Noteholders participated in negotiations with JPM, the FDIC, the Debtors, the Official Committee of Unsecured Creditors and other noteholders represented by...Fried Frank...in hopes of reaching a global settlement of the disputed issues in these chapter 11 cases."
Those negotiations to have a "global settlement" fell through, but it offers a glimpse to what is happening. Why are the FDIC and JPM offering a "global settlement" at all? Pull up a stock chart of WAMUQ and look at is since late March and tell me why this "zombie" stock has gone up 350%, it is because people privy to those negotiations most likely went out and bought WMI securities after the negotiations broke off. When insiders buy it is usually a good thing.
The Washington Mutual bankruptcy case has accusations of corporate espionage, double dealing by the government, and a backdoor negotiation and sale of a liquid, solvent bank. But it's much easier to call it a "zombie" and get on with your hard hitting journalism :-)
Thanks....
"Your honor JPM is purposely delaying to extract a more favorable settlement in their favor."
"Obviously if there is a significant recovery for the estate, which we believe that there will be..."
