Should i buy mtlqq

As I write on Oct. Motors used to be General Motors, and its common stock traded under the famous symbol "GM. Motors sold all of its good operating assets to "new GM" on July Yet, today it traded in a range between 58 and 60 cents per share. However, this is a stock without any "intrinsic" value, to borrow a concept from Aristotle. Motors is a company with liabilities that significantly exceed its assets, and none of the holders of MTLQQ can expect to receive any distributions. Despite some worries expressed by members of the financial media, there is no evidence that trading by widows and orphans, or other unsophisticated retail investors, explains the valuation and trading volumes in this stock.

Instead, MTLQQ is held almost entirely by sophisticated institutional investors, plus some fast traders and day traders, who may or may not qualify as sophisticated, depending on your point of view. The answer is that there is a substantial short position. This number has declined significantly over time. On June 15, just four months ago, the short interest amounted to ,, shares. On July 15, a few days after Motors sold all of its assets, squeezing the last drop of intrinsic value out of its stock, the short interest amounted to 44,, shares.

All of the remaining short sellers must, at some point, cover by buying back the stock. We will assume that all of the short sellers of MTLQQ obeyed the rules and borrowed stock at the time of these sales. The lenders of stock tend to be large institutional investors, who lend stock in order to obtain interest from short sellers. These lenders continue to collect interest, and will happily continue to lend their shares of MTLQQ, and collect interest, for some time.

After GM filed for bankruptcy, and the "old GM" stock was delisted from the New York Stock Exchange, institutional investors that had loaned GM stock to short sellers began calling their loans.

They did this so they could sell their stock into the market to establish the amount of their loss on GM stock for tax purposes. As institutional investors called their loans to liquidate their long positions, short sellers were forced to cover to obtain stock to satisfy their borrows. This process will continue until all the remaining stock loans are repaid, and the short interest is eliminated.

In the meantime, the short interest position continues to decline as institutional investors terminate their stock loans and short sellers cover. The current valuation and volume in MTLQQ has been exacerbated somewhat by Rule T, which eliminated the last remaining opportunities to engage in "naked" short selling—which is short selling without borrowing the stock. Under the old regime, when a company finally liquidated, there would be an outstanding short position that would never be resolved.

Instead, the short seller would simply promise to pay any proceeds eventually received to the purchaser, and under FINRA rules, that promise would eliminate any remaining obligations to cover. In my view, this practice defrauded the eventual purchaser, who paid value to obtain the stock, but never received it.

Rule T eliminated this fraud, but also required short sellers to borrow stock, limiting the supply. Other professional traders, aware that short sellers will need to cover, have purchased the stock, causing the stock price to be higher than would be the case without the existence of the short interest.

You can expect that short sellers, having been burned once, will avoid this type of squeeze in the future. No profit, no dividend. Can't see it as being anything but money down a hole. So it's better to call it the bankruptcy estate of the former company.

But G. From the same article: The new G. So no, you can't buy a share of the 'new' GM. It's a coinflip whether there will be any residual value in the liquidation. Investing should be taken with known risks, not throwing money at something and hoping it works. Stay away. I need more clarification please. Do you think the value will rise?

If so, keep them. Do you think the value will fall? If so, sell them. It's hosed. The company is bankrupt. As several people have already told you: the stock is almost guaranteed to be worthless. You are not going to see value off those stocks. They are valueless and likely will remain valueless.

I'm not sure how to be clearer. See this : Q: Is my G. The old GM as represented by Motors Liquidation is entirely separate from the new General Motors Company, a privately held company at this point owned mainly by the U.

It has no shares yet available for public purchase. For more than a month, Motors Liquidation and financial regulators have been warning investors to stay away from MTLQQ shares, yet many continue to buy. In bankruptcy proceedings, owners of common stock are last in line when it comes to receiving anything for their investments.

Secured creditors are first, unsecured creditors -- including most bondholders -- are second, followed by the owners of any preferred shares. Worried about the high level of trading in the old GM shares, the Securities and Exchange Commission and the Financial Industry Regulatory Authority last month issued a statement warning that buying shares in a bankrupt company is a high-risk venture. Yet the trading has continued with an average daily volume of nearly 33 million since the SEC and FINRA issued their warning, with the share price more than doubling between Aug.

Good news, indeed, but remember, there's no connection between Motors Liquidation and the high-efficiency Volt that will be manufactured by the new GM.