Question on CIT (bonds, calls, investment, stock)

[darrell2525]

Thanks for replying. I dont think they will meet earnings exspectations. The hovering issue with CIT is the threat of BK. After earnings tommorow, CIT will dip making it more interesting as a buy and hold for 2+ years. But, if the announce BK and I am holding, I am screwed. I just cant wrap my head around it, so I am just waiting for now. Can invest in something if you dont understand it, correct.

Thanks all

[eskercurve]

Totally agree with the "wait and see" option.

The interesting note to this is that if CIT goes bankrupt the credit market for small and medium sized businesses will have totally dried up (even more than it already has). CIT is kinda like AIG of small companies, only it is totally private (I think). That will hammer the mom and pop shops around the nation which employ 80% of our workforce. Could this be the next "big shock"? Only time will tell ... but I see storm clouds on the horizon (literally on this fine Seattle day, and figuratively).

The Fed and the government probably have little care for bailing them out like they bailed out AIG. I don't think it is a sure thing nor "too big to die".

Most likely scenario is that Icahn will lobby to have the firm carved up and sold. Then I'd take a look at the baby firms resulting from the fire and see which ones have the good managers & good markets.

[darrell2525]

Thanks for responding. Earnings should be out soon which should hammer the cit price again. Another good play (high risk, high reward) is AHR.

Thanks

[pghquest]

Originally Posted by darrell2525

Thanks for responding. Earnings should be out soon which should hammer the cit price again. Another good play (high risk, high reward) is AHR.

Thanks

hows that plan for a price hammering working out for you? You do realise that CIT was expected to report negative earnings of upwards of -$1.42, so any negative losses less than this would have probably resulted in an increase in the stock, not a decrease..

[darrell2525]

I am not so much worried about losses as I am a BK agreement with bondholders. I am not sure if CIT will beat 3rd qtr earnings expectations considering acutal EPS for 2nd qtr was -4.30, so I would beat it will be slight higher.

Only time will tell. But I am leaning more towards AHR, atleast BK is not on the table. But give CIT credit, they are trying to remove the debt.

Thanks

[pghquest]

Originally Posted by darrell2525

I am not so much worried about losses as I am a BK agreement with bondholders. I am not sure if CIT will beat 3rd qtr earnings expectations considering acutal EPS for 2nd qtr was -4.30, so I would beat it will be slight higher.

Only time will tell. But I am leaning more towards AHR, atleast BK is not on the table. But give CIT credit, they are trying to remove the debt.

Thanks

Bankruptcy is my only concern (which indeed is still on the table) because I'd be on the hook for 200,000 shares. Their EPS report was due Thursday, so the fact that they havent released it yet has me a little concerned.

[darrell2525]

WOW, 200k shares. Thats alot. I hope it all goes good for you and those darn bondholders take the offer. I see they sweetened the offer again.

I think they are waiting to accept the offer before releasing EPS results for this qtr. Just my guess.

I am still waiting on the sideline.

[pghquest]

Originally Posted by darrell2525

WOW, 200k shares. Thats alot. I hope it all goes good for you and those darn bondholders take the offer. I see they sweetened the offer again.

I think they are waiting to accept the offer before releasing EPS results for this qtr. Just my guess.

I am still waiting on the sideline.

Thats what they did last time they were threatening bk.. Held off on releasing the finances until they released the results of the bond offering..

[darrell2525]

What do you think will happen this time as far as bondholders approval or disapprval? For the price is at now, its steal like AIG was.

[pghquest]

Originally Posted by darrell2525

What do you think will happen this time as far as bondholders approval or disapprval? For the price is at now, its steal like AIG was.

Well I lowered my risk down to 60,000 shares just incase, but as I was talking to another investor, CIT has value and people will buy junk. I think Lehman Brothers is still trading for example, along with GM shares. (albeit at a much lower stock price)..

The problem I see it is, if they go through a structured bankruptcy, the shares will become worthless because CIT has obligated a large percentage of their assets to obtain their original $3B loan. Icahn wants to wind down the assets by loaning enough money to get through the current situation, but would also obtain an interested in the secured assets previously obligated.

Either way, it doesnt look good for long term stock holders.

The annoying thing is GMAC is now looking for a third bailout GMAC asking for fresh lifeline: WSJ - MarketWatch

But CIT which I considered in a much better position to help an economic recovery was told to go to heII.

Long term, I think this company might go down and when it does, it'll go down fast, and because the board made such poor deals to solve temporary cash crunches. CIT would have been better filing a reoganization bankruptcy several months ago instead of pledging their assets for a temporary loan. Goldman will actually profit $1B if CIT goes bankrupt, and with this kind of incentive its no wonder there is a dispute over what way to go.. http://www.businessinsider.com/henry...-hosed-2009-10

The failure to release economic data to me, means that they are either bad, but CIT is working on something to possibly save the company, or they are better than expected, and CIT doesnt want to release them because it would minimize the fear of "liquidation".. Either of these options are just possible hunches out of hundreds of combinations..

Regardless the whole board should be fired, and I for one am glad to see the CFO resigning. I just wonder what type of severance package they are giving out.