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The company got a loan for two years in order to continue business as usual.
Is there any good information about what is going on with this company ?
It feels like the company is going to climb back again to its original value in two years or so (~1000% climb)
what is the information an investor should use in this situation ? and what are the risks ?
The company got a loan for two years in order to continue business as usual.
Is there any good information about what is going on with this company ?
It feels like the company is going to climb back again to its original value in two years or so (~1000% climb)
what is the information an investor should use in this situation ? and what are the risks ?
Did you notice the terms of the loan? 10% initial rate, increasing by 1.5% each quarter with a cap of 17%.
Did you notice the terms of the loan? 10% initial rate, increasing by 1.5% each quarter with a cap of 17%.
Yes, its a terrible loan.
But, assuming they will pay it - three,four or even five year from now.
don't you think they will return to the exactly same position they were one week ago ?
and that is exactly what I am trying to figure....
No way. They'll be stuck paying back their bad debts for years and people ain't going to trust them with either financing or customer business again for a long time. I'm surprised they didn't just shut down or go private (they still might, who knows).
Yes, its a terrible loan.
But, assuming they will pay it - three,four or even five year from now.
don't you think they will return to the exactly same position they were one week ago ?
and that is exactly what I am trying to figure....
It popped up on my morning screen of % Losers so I took a quick look at the news. I just shook my head and kept on going to the next one. I'm aggressive, but something like that is not for me. It looks like the only winner in this may be Leucadia
It could pop tomorrow but longer term I agree that it could trade much higher but they will be hindered (earnings) by the leverage payments. I guess what I don't understand is if they fell behind the capital requirements because of clients losses of over $200MIL wouldn't most clients be able to meet the payment without many defaults? I had read that FXCM may use proceeds to actually expand the business. I guess I need to read the full 8K as to the true terms but I did read the highlights. LCD does not feel a default is probable for FXCM.
I guess the wildcard is also if the ECB does something unexpected on Thur to effect currencies. I almost pulled the trigger in the $1.30's but held off- a little gun shy from taking a substantial loss on natgas in December.
My only other concern is that so many people thinking the same as you could mean the stock will behave in the exact opposite of expectations
In an article in Barrons, it appears that Leucadia also gets around 30 to 50 million in fees and can force a sale of the company after 3 years with Leucadia getting most of the proceeds. My thoughts are that with so many other things out there, why roll the dice on a mess like this.
This makes me wonder if buying LUK at 0.77 P/B is finally worth it.
Unlike BRK and MKL, LUK guys invest in weird unloved stuff (maybe except National Beef.) And they haven't made investors any money for last umpteen years. But with JEF acquisition, maybe things will turn around. And if they get into loan-sharking like this, which Buffett would admire what with his GS, HOG and BAC deals during the 2008-2009 crisis; maybe LUK deserves a second look.
But then the flag bearer is BRK. If I can get Buffett's genius for free ($100K/year), why do I want to pay Handler and company millions per year to lose me money?
What a run!! High risk/high reward for those with the guts to gamble
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