Amazing 40X Return for AA Shareholders – Bankruptcy Pays Out…in this case anyway

“For an investor who bought American shares at their lowest closing price two years ago, the increase of more than 40 times to its current level is the best return over that period of any US listed company with a market value today of at least $300 million, according to a Wall Street Journal analysis of data from FactSet.” From the article:

When American Airlines parent AMR Corp. filed for bankruptcy protection in November 2011, its stock plunged to 20 cents a share and was soon delisted from the New York Stock Exchange. The entire company was valued at less than $90 million—less than the typical list price of a new passenger jet. Today, as American prepares to close a merger with US Airways Group Inc., the stock trades at just below $11, and a small group of investors who bet on it when it was flying low are poised to reap one of the biggest bankruptcy windfalls in years. That is thanks in part to a little-noticed quirk in the deal that means their holdings could translate into much larger stakes than previously expected in the combined airline, to be called American Airlines Group Inc.

Of course, this is not the norm and creditors usually don’t enjoy such financial recoveries in large bankruptcy cases, let alone get fully repaid with interest. In any case, quite the interesting story, check out the full article here.

new American

Comments

  1. I’ll remember this when an inanimate object automatically pops up in my seat the next (NOT) time I fly in a FC AA seat……….

  2. That is not correct. Its time WSJ looks into DTG. DTG(Dollar Thrift Automotive) was at one point trading at $0.50 during the great recession and it went upwards of $60 before it was finally brought by Hertz for 2.13 billion.

  3. I bought a few shares of this stock when it was really low just to be a smart butt to earn a US Airways hit on a Grand slam event. Little did I know it would come full circle. Wish I had bought more. I also bought some Ford stock under 50 cents. Wish I bought more of that!

  4. This post is flawed in multiple regards.

    “this is not the norm and creditors usually don’t enjoy such financial recoveries in large bankruptcy cases”. There are many, many examples of creditors achieving a full recovery in bankruptcy.

    Your use of “creditors” is misplaced. Last I checked, stockholders were owners, not creditors.

    The average pre-bankruptcy stockholder in AA lost a lot of money. To say this was a good return would be incorrect. That they are still in it after BK is notable, but I think few people who owned the stock for years are popping the bubbly.

    It would be possible to do very well on many investments if you timed the bottom (or top) perfectly. No one can do that repeatedly (at least not lawfully). You could write this post about any company that has had big moves in a stock. For example, if you shorted Tesla the day before the first of three fires was announced, you did great. What if those fires didn’t happen?

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