NWACQ.PK

[David Randolph]

Caution: this is a very high risk play. Invest only with capital you can afford to lose. I'll buy the usual 6.66% for the 3 Stocks on Fire Portfolio, because that is the rule.

We all remember AMR when it was just above $1 and was on chapter 11. A few weeks later the company re-emerged from Chapter 11 and the stock sky rocketed.

NWACQ.PK problems are very deep, but the company is turning the corner to profitability, if we exclude restructuring costs. Let's check their EBITDA for the past few quarters:



I had to go back all the way to 1999 to find two consecutive quarters as good as the last two on NWACQ (in EBITDA terms, of course).

Considering the revenue growth and the profit (not considering restructuring costs) expected for 2006, NWACQ should be at least a $2 B company, if it were not on Chapter 11 (it is just a $228 M market cap now).

The market is starting to believe the company will come out of the Chapter 11 and common shares will retain its representative value:



I'm willing to play this game, but I urge you it is a risky one, so invest no more than 20% of your capital in this - I'll buy just 6.66%.

Trading Plan: Buy NWACQ.PK today, below $2.76.

[realcoolhead]

I don't think AMR ever went to Chapter 11 ...

A question: if NWACQ came out of Chapter 11 someday, won't they be traded on new shares and make the old shares worthless?

-RQ

[David Randolph]

I don't think AMR ever went to Chapter 11 ...

A question: if NWACQ came out of Chapter 11 someday, won't they be traded on new shares and make the old shares worthless?

-RQ

I'll have to check that on AMR (no time now).

Yes, that may happen, but it can also happen that the company is able to make a deal with its creditors, get out of chapter 11, pay the debt in some years and shares will be worth $30.

If there was just one possibility, ie, «NWACQ shares will be worth zero» there would be no motive for speculation at all.

Anyway, the stock is opening with a 24% gap up, the trading plan was to buy below $2.76, so probably we'll pass this one for now.

Thanks for your questions realcoolhead, they're exactly the right ones, I need to dig further to answer them completely.

[gmarc66]

Wow....i was wondering if today it would break over the last high of $3.10, so that i could jump back in..as it would be a g-spot breakout...but, too late for that....nice gap.


glta

julia

[tokyopua]

Anyway, the stock is opening with a 24% gap up, the trading plan was to buy below $2.76, so probably we'll pass this one for now.

Hi David, just wanted to confirm whether you mean that you would pass because it probably wont be able to go below $2.76 today, or that because of the gap, even if it reaches the buy range today you would pass because the gap changes the technical picture?

[David Randolph]

No, the initial instruction was: «Buy below $2.76». It didn't say: «Buy below $2.76 if there's no gap up». I would never change the initial instruction, so I'll be buying on the $2.70 - $2.75 range today, whatever happens.

Also, remember that if the stock prints $2.76 the gap will indeed be closed.

(although it is already at $3.45, up 32% )

Thanks for your question Tokyopua

[Dracull]

My broker doesn´t have that stock to trade 
I'm using the interactiveBrokers (IB)
Any recomendation for other broker for me to use?

[David Randolph]

My broker doesn´t have that stock to trade 
I'm using the interactiveBrokers (IB)
Any recomendation for other broker for me to use?

Yes, IB doesn't let you trade Pink Sheets stocks. Ameritrade lets you do it, but I didn't bought the stock, it opened with a very big gap up, probably it will correct over the next few days.

Good luck !

[Dracull]

Unbelievable, my older and hatred national broker, B.I.G, has this baby for trade, luckily I still have some euros there just in case.

Back on the race, just hit the trigger David, and I will do the same here.

[Ramsburg]

Unbelievable, my older and hatred national broker, B.I.G, has this baby for trade, luckily I still have some euros there just in case.

Back on the race, just hit the trigger David, and I will do the same here.

You mean Big Online ? in Portugal 

[Dracull]

Yah, that's the one....I hate that broker, the fact of being so bad was the trigger for me to move to an internacional one (Datek at the time, 5 years ago, and now IB).

But, yes, Big Online trades this babe, afterall, I had a backup plane and I djavascript:void(0);
Cheesyidn't know it 

[pompano]

Looks like they had some problems with workers not working today.  Hopefully this news will fill that gap.  Lots of traders betting on this one.

[pompano]

David, where do you get your funamental analysis data/graphs from?

Thanks
The Pomp

[David Randolph]

David, where do you get your funamental analysis data/graphs from?

Thanks
The Pomp

I just saw your message pompano, sorry .

I get the fundamental data from the "Fundamentals" service from www.alphatrade.com, then I use Excel to make the fundamental graphs.

I'll move this thread to the previous picks board, will keep an eye on NWACQ.PK, need to study some issues about it.