AboutJay Kay Expertise As a private investor for the past 40 years, I have experienced both bull and bear markets, and have lived to tell the tale. I should be able to provide you with serious, practical insights into managing stocks, bonds and mutual funds in your portfolio, along with useful information concerning most aspects of personal finance. No specific stock/bond recommendations furnished.
Expert: Jay Kay Date: 2/13/2006 Subject: buying stock after Bankruptsy
Question should I buy stock after company bankruptsy? Or is that a bad thing. I would expect a stock of a major company, would be expected to rebound eventually. It was selling for over 20 dollars in 03 and $7 in fall of 05 and obviously fell through during bankruptsy... now at .57 cents... The company is post Bankruptsy now and is not going anywhere (away that is...). I think it is a great bargain in the long run. am I wrong?
I guess I'm not sure what I should look for in this scenario as warning signs.
V/R Brown
Answer Some stocks rebound in such circumstances, many do not. Apparently the only particulars you have are that it was a "major company," and that its share price has fallen precipitously. For me, this would not be enough. You are on the outside looking in, whereas those on the inside have bid the shares down to 57 cents. These insiders know the nuts and bolts of the company, they have access to the books and the management and to a thousand details that you and I know nothing about. Their considered opinion is that a share of stock is worth 57 cents. What have you learned that makes the stock seem like "a great bargain in the long run"? Why aren't knowledgeable investors buying it, and thereby bidding the price up?
I would suggest that you look elsewhere while keeping an eye on the movements of this stock.
