Georgia Gulf Corp (GGC) Looking Like a Short Again
Georgia Gulf (GGC) has rallied about 20% off of its lows since I started covering - closing today @ 16. I believe that is too high.
Meanwhile, you can still buy the GGC junior debt at 10-15% yields.
Tuesday, December 8, 2009
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Yes. I mean, what do people see in this company? Which has so obviously had its problems. And as you say really ought to issue equity. But again it's so low volume -- have learned to be wary of those. Gotta be more shares floating around out there now though.
The key is that it's in the *management's* self interest to deleverage the company. Easy way to avoid another spectacle like they just had. Provides job security.
Also in the woulda coulda shoulda category, OLN should have been a buyer of GGC debt in the spring.
Of course, debtholders would be better off if they sold stock as well.
Even equity holders would be better off!
Nice trade here. Given a lucky BIG boost by that too-good-to-be-true jobs report. (Jobs will stop disappearing eventually of course.) But anticipating a 'better than expected' jobs report during Christmas (hiring) would not have been going too far out on a limb.
Even equity holders would be better off!
Maybe in the long term, assuming you have confidence in management (I don't think the economy will be turning any corners soon.) But in the short term the stock would no doubt sell down.
GGC still not shortable at Etrade.
You like pair trades, so I'll throw out that I've been successfully 'pair trading' EDZ and EDC over the last couple of months. Obviously they are opposites and quite risky. I move in and out of each as per the market. Being 3x ETFs I always use stops, and indeed I've been stopped out on EDZ twice for small losses. And yes both times in the longer term I was stopped from making money, but some discipline is important.
Will be exiting EDZ today, then looking/waiting for the next chance to jump into EDC.
I have been tempted to short gold/silver but I haven't done anything about it.
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