User 166164

Why Bear for $5 May Make Sense

Two things about it:
1. The institutional investors have 77% ownership and thus the bondholders can't buy too much. The employees 30% portion of that 77% is mostly restricted to be non-voting. So the Bondholders don't have much to trade on.

2. The deal is for a 20% "option" to buy at $2.00. Sure that gives them some control of the board, but the other 80% of the stock is not priced at $2.00 and the market price could go up form there.

On another note, if this was a DONE DEAL, then why has the Fed allowed trading to continue. In a DONE DEAL, the trading would be suspended.

On another note, there were some Blog replies that made the point of the legality of this. The fed window was closed, so did they have the authority to do this. I think that's a stretch to try to sue the government anyway.

My killer question in all of this is the 80% not being purchased by JPM. Is it like Chrysler Stock at $3.00 or is the price somehow fixed at $2.00? I think it is market priced and that makes this another Chrysler deal.