Monday, September 25, 2006

Thanks Jeff M.

After a recent post Jeff M. pointed out what happened with United Airlines. United Airlines went into bankruptcy and while they were there they cancelled their common stock and reissued it.

Basically, the people hanging onto UA's stock lost everything when the cancellation and reissue occured.

So, I called Delta Airlines Investor Relations and I asked them if a cancellation of there stock was planned. Sure enough, as part of their reorganization Delta plans to cancel common stock and reissue new stock--this will occur sometime between now and March 27, 2007.

In other words, Delta's stock is a ticking time bomb. Investors rarely do their research--that statement includes myself--the reissue is written into their bankruptcy plans, and at some point the 150 million shares outstanding will be worthless.

So, I sold 10,000 shares of Delta Airlines today for $1.24 a share. So, I only made a 93% profit on the trade when I was hoping to make 1000%. LOL.

Thanks Jeff M.

Tuesday, September 19, 2006

Delta Update

OK, that last post was rambling.

Delta closed today at $1.50.

It's still looking good.

Friday, September 15, 2006

Delta Update

Like I said in an earlier post, I own Delta Airlines stock--10,000 shares to be exact. I bought it at $.65 cents a share. Today, it closed at $1.10. As far as trades go, I say I have a pretty good trade on my hands.

Ultimately, I'd like to hang onto this position until Delta begins climbing near an area of its former glory--It was as high as $40 dollars a share at the beginning of this decade. 40*10,000 is $400,000. To most people that's serious money. I'd be happy with $100,000, and it only needs to go up to $10 a share for that to happen--that's more realistic.

American Airlines went down to $.50 a share a couple years ago before it shot back up to $28 bucks a share.

Let's say you were a savy investor with some capital--you could have taken advantage of American Airline's dip. Let's say you had $50 grand and bought 100,000 shares. Today those shares would be worth about $2,700,000.

There aren't very many people in this world who couldn't retire off of $2,700,000. This was just one trade and it only took about 2 years for this to happen. The funny thing is--this happens all the time.

Every year I get 2 or 3 great ideas. I don't do anything special. I just follow the market. I paper trade a lot.

The beginning of this year I was looking at Delphi when it was $.30 cents a share. It's at a buck eighty right now. It's trending nicely. Do the 100,000 share scenario on this one.

Kmart was the same thing.
JC Penny the same thing.

I guess if you haven't figured I like companies that are in Chapter 11--probably NOT the most intelligent way of investing, but sometimes it pays off big. It goes along with the old saying--buy low-sell high. Well, if a company's in Chapter 11, it's going to hit it's low--probably its all time low. The trick is determining which ones are going to hit -0-. You don't want to own stocks that go to -0-.

Wednesday, September 13, 2006

Why I like Delta Airlines (the stock)

Delta Airlines is in bankruptcy. In 2000 the stock was about $40 per share. Today the stock is $.84 a share. (I bought it at $.65 a share.)

They expect to emerge from bankruptcy in the middle of 2007, and I believe they will for a number of reasons.

First, Management is good. The CEO of Delta is only making about $250K a year, and he's not going out and selling a bunch of stock options--translation: he's not "cashing in" while the rest of the Delta employees are taking pay cuts and suffering--that would be bad for company morale if he was.

Second, Delta cancelled it's old fashioned pension plan. It was too expensive.

Third, Gas prices are coming back down.

Fourth, I've spoken with many Delta employees. They are confident and they have high morale.

Fifth, they are selling off their regional carrier "Delta Express," which is losing money because it was competing with other low cost carriers like Southwest, Jet Blue, and Airtran and not doing so hot.

Sixth, they are cutting costs in the computer infra-structure. They just signed a deal Perot's company, which is going to save them tons of money. I actually got this news about a month before it was released. (a girl was blabbing about it at a bar)

Seventh, they are adding flights and recalling pilots and flight attendents--a good sign things are picking up.

Lastly, Delta is a great well-established company with a great PR department. They are constantly feeding great news about the company out to investors--this is probably the most important thing of all. People need to feel like they are making a good decision when they invest--good news instills confidence.

So, there you have it. My stock pick of the week. If I had the money I would buy 100,000 shares, and I would probably be a millionnaire by the middle of next year, but I would settle for $100,000.