DISQUS

Market Folly: David Einhorn's Greenlight Capital Has Big Bets on Gold, URS: 13F Filing Q1 2009

  • PeterD · 6 months ago
    David Einhorn has no GM postion . Great. Chase Coleman completely sold out his GM position (13F Q4 2008). Great again.

    Now here's my question: Why does GM's share price still hover around $1 and not drop down to zero, or close to zero, since it is certain that the current shareholders (whatever the new arrangement) will be wiped out? Tens of millions of GM shares traded today. Why would anyone want to hold a GM share now? If I were shorting GM, I would not cover my postion now. I would wait 'til it dropped to Zero.

    Just asking... :)
  • marketfolly · 6 months ago
    I have absolutely no idea and have been perplexed by the same thing. Even if GM for some reason does not file bankruptcy, they are in a huge hole. And, if they do file for bankruptcy and then emerge again, they are yet again still in a big hole. I'm not sure why the shares are trading that way... maybe there is an arbitrage play that way. It is essentially a penny stock these days they way it trades. No rationale or reasoning... probably a lot of quants trading it.
  • ak · 6 months ago
    hi market folly-

    continue to appreciate your blog. it looks like a lot of hedge fund folk are buying into wyeth. what do you think the major risk is with the deal? also, this is probably a very stupid question, but are there any tax implications to the shareholders getting the $33 a share back in cash that you know of? thanks so much in advance.
  • marketfolly · 6 months ago
    Hey ak, thanks for the kind words as always, much appreciated!

    Yes, definitely a lot of funds into WYE these days. I think the problem with following them into this play though is there is a lot of arbitrage and event-driven strategy going on here. So, these funds undoubtedly have a short on the other side of this trade in the portfolio that we can't see. So, it's hard to gauge exactly how they're playing it. Buying WYE by itself is probably more risky and I doubt any of the funds have simply gone lone wyeth without doing anything else.

    As for the tax implications I'm honestly not sure since I haven't looked at the deal in depth (I'm not a big merger arbitrage guy unfortunately). I would think that maybe it is similar to the RIG + GSF merger (Transocean and global santa fe) where they combined shares and then paid out a dividend. But for the tax implications I'd have to refer you to someone who has more expertise in the area like a CPA. I'm sure you are taxed to some extent on it though, whether it is treated as ordinary dividends or something else.