YRCW

YRCW Offers New Shares

 
The Overland Park, Kansas based YRC Worldwide (YRCW:NASDAQ) issued a filing that states that the company will convert preferred shares and issue roughly 1.86 billion new shares. The deal is obviously dilutive for YRCW shareholders. Current shareholders will now own less than 3% of the common shares. This controversial move was voted on by both preferred and common shareholders.
 
Does this deal surprise many ? Absolutely not. While YRCW was once one of the largest U.S. based publicly traded trucking companies, they basically only grew through acquisition, and not organically. Within the last 10 years YRCW has made acquisitions that have totaled more than $2 billion. YRCW has been mostly sizzle with no steak, and has produced massive losses despite producing significant revenues.
 
YRCW is also facing a delisting notice, and management is now faced with getting it’s stock up over the $1 level sooner rather than later. After watching Friday’s tape action, $1 seems like a pipe dream. At the time of this entry shares are at 7 cents and only slightly above the day and year lows.

YRCW Sparks Interest For Investors

So what do you do from here ? Well if you are long from higher prices and currently have capital gains, then taking a tax loss might be prudent. On the flip side, if you are thinking of getting long, just review some other names that were delisted, like Lehman Brothers (LEHMQ:PK) and Washington Mutual (WAMUQ.PK). How have they worked out after their dips ? Not very well.

While YRCW is not for the inexperienced trader, at the same time some savvy penny stock scalpers might see a play in this beaten up name. But for now just let the experienced play this game. I know that the IHUB boards will be flooded with scalping opinions and rumors of breaking news. But remember, the pro’s who make money in penny stocks like YRCW often are successful by simply sitting on the bid and catching some momentum after they get filled.

So unless you are super experienced or are a gambler with money to burn, sitting out on YRCW is probably a wise action to take.

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