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goldminingXpert (29.75)

HAWK goes belly up to CAPS surprise

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February 15, 2011 – Comments (11) | RELATED TICKERS: HAWKQ

Probably the greatest disconnect between what people thought would happen and what did happen in quite awhile. 49 out of the top 50 ranked players at CAPS to pick HAWK had green thumbs. Two questions: Did most of the highly-ranked players to throw green thumbs on the HAWK actually do due diligence or were they just following along? I briefly green-thumbed HAWK without doing due diligence but closed it for a small gain quickly and didn't return as I saw deteoriating finances. Secondly: Why is HAWK still selling for four bucks and change this morning? Rather odd reaction for a bankrupt company, right?

11 Comments – Post Your Own

#1) On February 15, 2011 at 10:15 AM, GNUBEE (26.88) wrote:

Baaa.....

 Whoops, no DD on my part.

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#2) On February 15, 2011 at 11:15 AM, Momentum21 (96.31) wrote:

It really depends on if you talk about owning them after the spin-off or buying them more recently.  

There were some pretty good pitches here which gave me the idea as the stock was descending from its perch (pre-Macondo) of $30. Most of what I have read was pretty solid assessments of risk/reward. 

The level of debt was low but you knew that the drilling moratorium was changing that for the worse. You knew they were shopping the assets and/or the company. 

In hindsight, there are a couple of question marks that probably didn't change the downside but limited the upside in a transaction. Liability claims with Pride...and a looming tax issue with the Mexican Government.  

My take is that the BK filing was their only choice to expedite this transaction (and minimize the damage) due to the latter liability issue above. That is the basis for me continuing to hold my real life position...with all the speculation it is not a place to buy more (at least for me personally). : )

That said, I have no idea how stockholders will be dealt with here. There is a case to me made that the quick action is better than waiting while 500 employees and your customers hang in the balance.   

Perhaps I am too much of an optimist. I think this evolves into more of a merger once the pieces get settled. 

There is a bit of a political aspect here as well. Why weren't these guys allowed to drill in shallow water?  

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#3) On February 15, 2011 at 11:28 AM, Momentum21 (96.31) wrote:

This reminds me of Wilmington Trust. Same price level, takeover target, etc. They ended up getting bought out for 1/2 of what they were trading for once the buyer got under the hood and time was running out. 

These small cap acquisitions can be dicey when your options are limited. A drilling moratorium and glut of drilling rigs sitting idle doesn't exactly create a sense of urgency for buyers. 

 

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#4) On February 15, 2011 at 2:05 PM, Option1307 (29.88) wrote:

64, goldminingxprt.  you are not out, just resubmit a qualified stock.  If a fool sees goldminingxprt on the boards let him know he can still resubmit.  I am looking forward to seeing his pick...

and

Tell goldminingxprt to resubmit a stock,

You're being summoned over at the chimpcontest fyi

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#5) On February 15, 2011 at 3:10 PM, goldminingXpert (29.75) wrote:

I am aware I can re-submit, just having issues deciding what to pick. I think the market is going lower and so I'm not sure what direction to go if I can't stick with my trading at 60% of book value pick.

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#6) On March 03, 2011 at 1:22 PM, Momentum21 (96.31) wrote:

As it turns out, someone who red-thumbed this stock after reading an article or two and seeing the word "Bankrupt" is currently in a much bigger bind than someone who blindly followed a CAPS pitch back in December. For now at least...

My only point is that being aware of your odds has a great role in one's ultimate success. If you become in love with your "due diligence" you will simply make outsized bets that eventually will lead to your demize.  

A cursory look at Seahawk's financials would tell you this was always a dicey long play and I am sure most green thumbers knew that...you don't become top fool by buying Coke and Pepsi now do you??  

The real question is: Do you double-down short on HAWK from here? ; ) 

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#7) On March 03, 2011 at 5:50 PM, goldminingXpert (29.75) wrote:

Well, HAWK shareholders will get $5 or $6 a share now because HERO soared. For my article, I assumed a HERO value of $3.65 a share (it was at $4 at the time and that pop didn't seem justified) -- and now HERO has soared well into the 52-week high zone up toward $6. Each $1 increase in HERO shares=$2 more for HAWKQ holders, and my original SA article said HAWK holders would get $1-2. Now with HERO up $2 a share, HAWK's value is up $5-6. The question for HAWK now is, can the stupid completely unmerited increase in HERO hold up or will HERO return to its proper value?

 As long as HERO stays overvalued, there's no sense in shorting HAWKQ.

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#8) On March 03, 2011 at 5:51 PM, goldminingXpert (29.75) wrote:

*- HAWK's value is up to $5-6.

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#9) On March 03, 2011 at 6:06 PM, Momentum21 (96.31) wrote:

 As long as HERO stays overvalued, there's no sense in shorting HAWKQ.

I was being a little sarcastic with my question and was wondering how much DD you actually did since your piece in SA. Perhaps there is more to the story here other than "where there is smoke...." 

HAWKQ closed at $6.40 today and you red thumbed it at $4.34. 

They are not belly up yet! 

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#10) On March 03, 2011 at 6:06 PM, Momentum21 (96.31) wrote:

 As long as HERO stays overvalued, there's no sense in shorting HAWKQ.

I was being a little sarcastic with my question and was wondering how much DD you actually did since your piece in SA. Perhaps there is more to the story here other than "where there is smoke...." 

HAWKQ closed at $6.40 today and you red thumbed it at $4.34. 

They are not belly up yet! 

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#11) On March 03, 2011 at 11:53 PM, goldminingXpert (29.75) wrote:

Not sure I understand your last comment. My analysis indicated that HERO was worth, at most $4/share. At that valuation, the remaining assets left for HAWKQ shareholders were equal to somewhere between $0 and $2 -- most likely around $1.

Now that HERO has bizarrely soared to $5.70 a share, HAWKQ is worth around $5 a share since each increase of a buck a share in HERO is worth roughly $2 a share in HAWKQ (22M shares of HERO/12M shares of HAWKQ if I'm remembering right)

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