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Author Topic: Playing Chapter 11 Bankruptcy Stocks  (Read 8441 times)
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carolina_bound
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« on: July 18, 2012, 08:15:55 AM »

I came across VLNC the other day on a stock scan and noticed the stock lost over 90% in one day due to the company filing Chapter 11 Bankruptcy.  Curiousity got the best of me, so I started looking at some other stocks of the recent past that also filed Chapter 11.  Below are the first 4 stocks I've taken a look at and a chart around the time of the filing

 FUELQ: Filed 4/16/2012 http://stockcharts.com/h-sc/ui?s=FUELQ&p=D&st=2012-04-02&en=2012-06-01&id=p57449903749

 EKDKQ: filed 1/18/2012 http://stockcharts.com/h-sc/ui?s=EKDKQ&p=D&st=2012-01-02&en=2012-03-01&id=p20862651495

 AAMRQ: filed 11/29/2011 http://stockcharts.com/h-sc/ui?s=AAMRQ&p=D&st=2011-12-01&en=2012-02-01&id=p17122430768

DYNIQ: Filed 7/6/2012  http://stockcharts.com/h-sc/ui?s=DYNIQ&p=D&st=2012-07-02&en=(today)&id=p16770336422

Although this is just the beginning of my investigation, I did notice some similar patterns

1. Of course they all had major drops following the announcement, with the fall lasting up to 3 days before it rebounds.

2. The rebound can be substantial, as in the case of FUELQ and AAMRQ (around 50-60% in one day)

3. Within 15 trading days the stock seems to trade to at least 50% of its pre chapter 11 price.

My hope is to gather information on about 100 - 200 Chapter 11 Stocks and try to figure out if there are any markers that could be used to determine the risk/reward ratio and then post the results.  I'm not sure if there is an easy way to find these stocks (googling "Chapter 11 Stocks for instance) or trying a search on stocks ending in "Q".  I am also asking for a little help from the community on this project, as researching all the variables (A/S vs OS, Float, Assets/Debt,Volume, etc) will be quite time consuming.  So if you have any ideas, thoughts, recommended data points to track or can research some variables, it would really be appreciated.

Thanks

PS... Today is VLNCQ's third trading day after filing - May throw some that way and see how it plays.
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Stretcher75
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Have an entry / exit strategy and you will be fine


« Reply #1 on: July 18, 2012, 10:29:02 AM »

Agreed, bounce plays are good. IMO they do this so some of the big boys can get out without losing their shirt.
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Dasein
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« Reply #2 on: July 18, 2012, 11:14:57 AM »

Getting a little bounce on VLNCQ already. And we remember ATRNQ's bounce from .01 to .018. Think that was on the third day as well.
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Stretcher75
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Have an entry / exit strategy and you will be fine


« Reply #3 on: July 18, 2012, 11:34:11 AM »

It just fell -16%

Getting a little bounce on VLNCQ already. And we remember ATRNQ's bounce from .01 to .018. Think that was on the third day as well.
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carolina_bound
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« Reply #4 on: July 18, 2012, 11:34:32 AM »

I jumped in a little too early on it @ .025 and .022.  Could test .02 before the end of the day, but confident it'll bring some nice profit within a week.  FUELQ took 3 days down before day 4 brought a 100% gain on the day.
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goN4it
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this is Lucky, now bring me luck


« Reply #5 on: February 18, 2013, 02:39:34 AM »

Hi Carolina ,  Glad you started this a while back. The last comment on this feed being in July, wondering if you picked up the thread or research somewhere else? Interested in trying to go into the research as well. Ive been doing aamrq. in at .65 but didn't play, just stayed. Im thinking that following the court status/dockets on these may be really really helpful. Please let me know if you are continuing this work elsewhere. (Im not gold right now, but will be able to be active again soon, if you have things on this concept there). Thanks a bunch
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whalescatfish
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« Reply #6 on: May 06, 2013, 04:15:25 PM »

Chap 11 is dangerous because oftentimes all the shares are nullified once it exits bankruptcy. I think for AAMRQ though they stated they're going to give a fraction of shares in the reformed company. Just be careful.
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