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Viewing 9 posts - 1 through 9 (of 9 total)
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  • March 12, 2007 at 8:12 AM #8574
    AK
    Participant

    Trading was halted before market opening … here’s why. I do feel bad for the honest folks who answered phones, sorted mail, processed payroll, etc., but to those who got rich off looney-tunes lending standards I can only say: “That’s all, folks!”

    New Century Creditors to Pull Plug
    Monday March 12, 8:18 am ET
    New Century Creditors Notify Company of Plans to Halt Financing; Shares Plummet Pre-Market

    NEW YORK (AP) — New Century Financial Corp. said Monday all of its lenders have cut funding or announced their intent to halt financing after the embattled subprime mortgage lender failed to make payments, pushing the company further toward bankruptcy.

    “The company and its subsidiaries do not have sufficient liquidity to satisfy their outstanding repurchase obligations under the company’s existing financing arrangements,” New Century said in a filing with the Securities and Exchange Commission.

    New Century, which lends money to prospective home buyers who have poor credit histories, uses short-term borrowings to finance mortgage loan originations and purchases. The company said there is no guarantee it will receive additional financing.

    “If the company and its subsidiaries are not able to satisfy their repurchase obligations, one or more of the company’s lenders may seek to liquidate the mortgage loans or other assets,” New Century said.

    The company received letters from Wall Street lenders including Bank of America, Goldman Sachs, Morgan Stanley and Citigroup, among others, alleging events of default.

    Last Thursday, New Century said it stopped accepting all new loan applications because it was short on financing. The company faces a slew of investor lawsuits and an investigation by the U.S. Attorney’s Office for the Central District of California.

    Its stock has been hammered by investors in recent weeks, falling from around $30 a month ago, to close Friday at $3.21 on the New York Stock Exchange. In pre-market electronic trading, shares plummeted $1.29, or 40.2 percent, to $1.92.

    March 12, 2007 at 8:22 AM #47413
    4plexowner
    Participant

    What happens to people who are currently short this stock?

    Obviously they are hoping trading in the stock resumes so they can cover but what happens if trading doesn’t resume?

    March 12, 2007 at 8:23 AM #47414
    LA_Renter
    Participant

    I found this quote and it rings oh so true

    “What happened next seems all too familiar to investors who bought technology stocks in 2000 at the breathless urging of Wall Street analysts. Last week, New Century said it would stop making loans and needed emergency financing to survive. The stock collapsed to $3.21.

    The analyst’s untimely call, coupled with a failure among other Wall Street institutions to identify problems in the home mortgage market, isn’t the only familiar ring to investors who watched the technology stock bubble burst precisely seven years ago.

    Now, as then, Wall Street firms and entrepreneurs made fortunes issuing questionable securities, in this case pools of home loans taken out by risky borrowers. Now, as then, bullish stock and credit analysts for some of those same Wall Street firms, which profited in the underwriting and rating of those investments, lulled investors with upbeat pronouncements even as loan defaults ballooned. Now, as then, regulators stood by as the mania churned, fed by lax standards and anything-goes lending.”

    March 13, 2007 at 7:59 AM #47534
    AK
    Participant

    To the pink sheets it goes …

    NYSE Suspends Trading New Century Financial Corporation’s Securities

    http://biz.yahoo.com/prnews/070313/latu083.html?.v=92

    March 13, 2007 at 8:32 AM #47541
    noone
    Participant

    What happens to people who are currently short this stock?

    I’m curious about this too. And what if they are delisted?

    March 13, 2007 at 8:42 AM #47542
    Cow_tipping
    Participant

    Puts will result in tons of money if its halted and/or delisted. If the stock drops to like .32 cents … you get the strike price minus the 32 cents per equity you’re short. I believe the minumum is a 100 count per contract. can you say Ka-ching.
    However once trading is halted on the equity, you cannot buy the option either. That door gets closed … cos halt in equity = halt in option.
    Cool.
    Cow_tipping.
    PS: I wasn’t too clear in my repy. Even if trading is halted there is still a price which ironically moves as well. You only cannot buy the option. Ones that you hold, you can sell.

    March 13, 2007 at 9:01 AM #47548
    Anonymous
    Guest

    Not sure about the details of shorting a delisted stock, but I imagine if the stock ceases to exist you logically have no obligation to pay anything back (i.e. cover the short) since the stock is worthless.

    Regarding puts, I am sitting on NEW puts right now so I’ll find out soon what the procedures are. However, I was assured by my broker that if the stock is delisted or essentially worthless, the seller of the “put” contract is still under obligation to pay the money which would essentially be the entire strike price at this point.

    March 13, 2007 at 9:10 AM #47549
    Happy renter
    Participant

    Ussually, stocks become trash if companies file bankruptcy and shut down. Companies have least obligations to common stock holders. Some people may buy the stocks when the companies almost out of business, e.g. $0.10 to gamble. If the companies can turn around or being bought out by another comapnies, they get huge profits. But usually the companies with serious debts would just close the doors. Then, they open again by using different name to issue stocks and raise tons of moeny again.

    Remember Kmart filed the biggest retail bankruptcy ever in the United States in 2002. It released all the bebts and liablitiies. Then, it turned around to use another name Kmart Holding to raise tons of money from issuing new stocks. Later, Kmart meraged with Sears for $11B and shares sky rocketed. Now, SHLD is $178 / share.

    It is part of the game in the Wall Street. Big Croporations and lawmakers do control the markets. We are individual investors just have to keep ourselves knowledgeable in order to survive.

    March 14, 2007 at 2:17 PM #47679
    AK
    Participant

    Now trading on OTCBB a.k.a. Pink Sheets … down to the price of a candy bar.

    http://finance.yahoo.com/q/bc?s=NEWC.PK&t=5d

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