by Dave Kranzler, Mining Stock Journal
“No one ever loses equity in a bankruptcy case,” U.S. Bankruptcy Judge David Jones said during a status conference in the J.C. Penney case last month. “Equity gets lost long before the case is filed.”
Hertz filed Chapter 11 under the U.S. Bankruptcy Code after the market closed on May 22nd. The filing was well telegraphed. The next day the stock took a cliff dive down to 40 cents from the previous day’s close at $2.84. Below 50 cents is about where the stock of bankrupt company should trade, especially when the senior secured debt outstanding exceeds the value of a company’s assets.
But don’t tell that to the new breed of retail daytrader, who has rediscovered the “art” of chasing insanely overvalued stocks, most of which will eventually go out of business. Most if not all of the current batch of daytrading geniuses were not around during the dot.com boom/bust: