Does any one know what happens to dalrq when delta exits bk? Do they issue new stock? If so, why is there any value associated with it currently?

 

Understand that stock is just ownership in a company. Just becasue Delta is in bankruptcy dosen't mean the company (or its stock) dosen't have any value. As far as I know a company in bankruptcy can still issue stock if it so desires.

On a side note: NWA stock was at little over $.60 five or six weeks ago, it closed at $5.90 today. I was gonna buy some.....

 

I was under the impression that United issued new stock when they exited bk. As I understand it now, dal will issue new stock when they exit bk. So the only thing controling the dalrq stock price right now is the possibility of a merger. Any one care to expound on this..... Please forgive me off my ignorance on the subject.

 

You're not alone in your ignorance!! I too am well steeped in the annals of ignominy & dim-wittedness. I suspect that you, like me, toyed with the idea of buying tons Pink Sheet Stocks at about a buck only to have them skyrocket to post BK 52 week highs, right? I believe the stock will be wiped clean like K-mart rendering the pink sheet stocks worthless. I'm not sure, though ...

Honestly, I have watched Delta stock like a hawk for the last 3 months. You can almost set your watch by the "bell curve" caused by the day traders getting in and out making their $.10 a share. That's about the only way you'll make any money with a bankrupt airline stock. I have toyed with the idea of making $.10 a share myself. I still haven't ruled it out.

If history serves, you can probably make money on Delta if you buy as soon as the the new stock is issued. Don't take my word for it, check out post BK stocks, i.e. US Airways. Good luck, man. Happy holidays

 

I bought shares at 1.26 last week and today it went from 1.73 to 1.50. i should of known better than to hold it longer than 3 days, but i still made a little bit of money. it is a VERY tempting stock!! I wonder if it will split or something after their out of bankruptcy.

 

You should be looking to buy stock in a company that is going to have solid earnings growth. While you can "trade" stock in a bankrupt company, know that the creditors can choose to take the company private, maybe paying you something, maybe not, liquidate the company, in which case you'll get nothing, or just void the stock all together. Ergo, stay away, as it's really worthless if they choose to liquidate the company. Any movement right now is based on the rumors of a merger, where US Airways will pay a certain amount for each share (hopefully above market value). Probably not much more. If Delta stays single, the stock will crater. If they reissue stock, that will just drive the price down more as more shares become available. They probably wouldn't raise the capital they are looking for through stock, and will just issue more bonds. Best case scenario is they start buying it back. Splits tend to only help stocks that get up to $100+ a share as people are leery of paying that much for a share. Which is stupid (P/E shows a true stock value, or 2x sales growth for a retail stock) since "value" varies from company to company (and how many shares our on the market, etc.). Splitting a $1 stock is ridiculous.

Stay away! There are plenty of other company's kicking a$$ out there to invest in....

FWIW... Jim Kramer's "Real Money - sane investing in an insane world" is a GREAT starter's book.

Spongebob

 

wow, that was a complicated post to follow, but i'm selling delta TODAY because of it. thanks!! I made my $$ to cover commissions, that's good enough.

 

Leo,

Good plan. Another general rule is don't invest any money in stocks below $10 a share that you don't want to lose. There's a reason why it's that low.

If you need to be in an airline, go with "best of breed", or the best 1-2 companies (works in any sector) so for airlines that would be: CAL (which is still fundamentally bad) but overseas such at Ryanair or Cathay (I own Cathay... up 30% since I bought it in July). When you get down to it, there is no growth in the US Airline industry, which is bad. US Airways saw the move because America West of buying a complementary route structure and aircraft at a fire-sale price, and the US Air investors were happy because they were going to get some money.

A better play would be on companies associated with Air Travel since that is doing well as a whole. Companies like this would be Boeing or Sabre (though I think Sabre is being taken private?), or others that provide some service to the industry.

I think US airlines will suck investment wise until capacity gets aligned with demand and a bunch of mergers take place...but, you can look all the way back to the 1930's where people were saying that airlines were a great place to turn a million dollars into nothing!

HTH
Spongebob

 

Boys...listen up...If you are gonna try and make your living flying planes, please, please, please don`t invest your money in airline stocks. For everyone that makes a profit doing it, there are at least ten that lose their a$$es doin` it. Get on a plane, fly, jump seat, or non-rev to LAS, rent a car, drive out to the "Mustang Ranch", and spend your money there. At least you can have fun getting $crewed there.

 

Thanks for the info. Any other suggestions on some good books to pick up.