US Airways Dividend Miles (Pre-FlightFund Merger) - USAir is in Chapter 22, and people are buying its shares!

If you look at USAir's shares, they are still selling at over $1 each. Do people understand that even if restructured, equity holders are likely to get ZERO?????? I don't know who is dumber: the unions, the management, the buyers of the stock, or all all of us still holding our miles when we saw it coming.

Probably the same people that

- bought the stock when it was $1 after the first bankruptcy
- are upset that their brokerage accounts won't let them buy lotto tickets with their IRA money

At least we can LOL :D

Dead cat bounce, baby! :)

Actually, alot of the buying is probably due to short-sellers closing their positions.

Actually, alot of the buying is probably due to short-sellers closing their positions.

Exactly.

However, the volume for the last two days has been a large multiple of the outstanding shares shorted. I'd say it's the day-trading penny-stock traders trying to squeeze out a nickel or dime before the music stops.

As a very active short-seller, I can see why institutional shorts would close their positions now, since they have no tax effects. For retail investors, it is far superior to wait a few months until January to close for two reasons:

1. the stock will almost definitely be lower than it is today, and

2. short-sellers have already received the cash profits of the trade as it was marked-to-market in their account. However, they don't have to pay taxes on the position until they close it. If they wait until Jan. 1 to do so, they can delay the taxes on the gain for another year.

I've had a short position in a company that has been sitting at < $0.05 since 2002. I've already received the cash for the gain and invested it elsewhere, but it still actively trades, so I delay the tax day until it emerges from bankruptcy or the shares are cancelled.

You CAN make money on a company's stock in bankruptcy. UA had an inexplicable up tick in their stock. In March of 2004 they hit $3.7 a share from just $2 a share a few months earlier--ALL while in bankruptcy. So if you are a risk taker--you can get a great short-term return. But do you feel lucky punk? ;)

Check it out

http://finance.yahoo.com/q/bc?s=UALAQ.OB&t=1y

This phenomenon is also known as the Greater Fool Theory.

This will dry up the trading in a hurry, since Pink Sheets trading requires 100% cash upfront to trade at many brokerages.

http://biz.yahoo.com/prnews/040914/dctu061_1.html

ARLINGTON, Va., Sept. 14 /PRNewswire-FirstCall/ -- US Airways Group, Inc. securities will cease trading on The Nasdaq Stock Market effective with the opening of business on Sept. 22, 2004.

US Airways received written notification on Sept. 13, 2004, from Nasdaq that its securities will be delisted in accordance with Marketplace Rules 4300 and 4450(f). As a result of the notification, the fifth character "Q" will be appended to the company's trading symbol, which will change from UAIR to UAIRQ at the opening of business on Sept. 15, 2004. Once delisted, shares could still be traded in the "Over-The-Counter" market, which the company does not control.

This will dry up the trading in a hurry, since Pink Sheets trading requires 100% cash upfront to trade at many brokerages.

http://biz.yahoo.com/prnews/040914/dctu061_1.html

ARLINGTON, Va., Sept. 14 /PRNewswire-FirstCall/ -- US Airways Group, Inc. securities will cease trading on The Nasdaq Stock Market effective with the opening of business on Sept. 22, 2004.

US Airways received written notification on Sept. 13, 2004, from Nasdaq that its securities will be delisted in accordance with Marketplace Rules 4300 and 4450(f). As a result of the notification, the fifth character "Q" will be appended to the company's trading symbol, which will change from UAIR to UAIRQ at the opening of business on Sept. 15, 2004. Once delisted, shares could still be traded in the "Over-The-Counter" market, which the company does not control.

Why does this happen? Is it because of Chapter 11?

Why does this happen? Is it because of Chapter 11?


This is done as a protective measure. By moving the stock to the pink sheets the NASDAQ is basically telling investors in their market they don't think its an appropriate stock to own.

I don't really see that this is so terribly foolish IF AND ONLY IF the investor realizes that he or she is making an extremely risky, speculative investment.

Stranger things have happened than UAIR finding a miracle savior willing to pump some more cash into them (aka down the toilet). I certainly would not make such an investment, but some individuals are willing (and able) to take huge risks like this. For an amateur investor planning for the future of the family and whatnot, this is clearly not a good pick. But for people with tons of money in play, a small position in this stock at 80 cents or whatever is a high-risk, high-reward proposition.

Personally I think UAIR will be auctioning off the light fixtures in a few months but like I said, stranger things have happened than UAIR finding a way to pull this out.

Actually, I can't find the "high-reward" side of the equation, even if they pull it off.

At this point, it's generally accepted (even by UAIR's mgmt in today's press release) that the equity will be worthless. Let's say a minimum 95% chance it goes to zero.

In a best case scenario, perhaps the stock rebounds to $5. Wow! a 400% gain!

However, the weighted probability of the two outcomes is:

(0.95 * $0.00) + (0.05 * $5.00) = $0.25

This is roughly what state lotteries return, so I suppose it's as good a gamble if you're used to those odds. Plus, unlike blowing your paycheck on pulltabs at the gas station, Uncle Sam is subsidizing your loss.

This is what I would call a sucker's bet in every sense. Somebody's got to be on the other side of my short position, I suppose. :cool:

Well, like I said, I wouldn't do it. But to each their own I guess. Some people enjoy the risk.

And as a fund manager, 400% might be no biggie but for us mortals.....I'd be happy with that on any investment!!

Risk with positive expected outcome = good

Risk with negative expected outcome = bad

Most of the chumps dumping their lotto money into UAIRQ (new name as of 9/15) don't know the difference, and I have an eerie feeling that they also did this the first time around...

Risk with positive expected outcome = good

Risk with negative expected outcome = bad

Most of the chumps dumping their lotto money into UAIRQ (new name as of 9/15) don't know the difference, and I have an eerie feeling that they also did this the first time around...

Well, then let'em throw their money away. It'll be no one's fault but their own. The path of the wise investor is lined with the money of the foolish.

Well, like I said, I wouldn't do it. But to each their own I guess. Some people enjoy the risk.

And as a fund manager, 400% might be no biggie but for us mortals.....I'd be happy with that on any investment!!



I'll be happy to write you a June call with a strike price of $1 for as many shares as you would like. I'll be happy to take your money, and I'll even put a smile on my face when I do (unlike some airline employees...sorry, I couldn't resist).

Hmmmm... it depends on the price of those $1 June calls. 50 cents? No way. A half-cent? I might take a gamble there. Put me down for 100 contracts and I'll drop a $50 check in the mail right now... :p

Hmmmm... it depends on the price of those $1 June calls. 50 cents? No way. A half-cent? I might take a gamble there. Put me down for 100 contracts and I'll drop a $50 check in the mail right now... :p


I was thinking $0.25. That way for all of the people betting on a quick move to $5 they could earn a 1,600% return. Still a taker? Remember, they are June calls.

$0.25?

:D :D :D