I was arguing with a guy about how much I thought FT funds were (he was being rude to other regs who thought FT funds was near "worthless" and his estimate of 50+ cents on the dollar was absurd), and it seemed like an interesting thing to re-post:
If FT funds worth anywhere near 50 cents, people would be snapping them up at the current market price of 15 cents (including me). The market is made up of buyers and sellers. Sellers want to sell because they think it's worth less and buyers want to buy because it's worth more. Obviously the number of people who want to sell have overwhelmed the number of people who want to buy. And it hasn't been a sudden panic... this has gone on for MONTHS. The slow and mounting volume of people wanting to sell have overwhelmed the few people wanting to buy and have driven the price down. I have no idea where you are getting that there are tons of smart people buying. "Tons of smart people buying" would mean the price would have stablilize or to go up at some point. I haven't seen that happen.
Also, I don't think the corporate standards for asset accounting holds for this company, as evidenced by past management actions. The longer this goes on, the less money they have. The industry is also (effectively) unregulated, so I suspect the standard bankruptcy/liquidation procedures may not take place. "Class action lawsuit" sounds much better than it is.
As previously mentioned, I see no way ANY investor is going to want to invest in the current company. Why should they pony up $200 mil in lost player accounts, AND take on all the legal woes? This makes sense to you? There might be some other work-arounds, but the "pay off player debts" is not in most of those scenarios.
You have become blinded by what you think the valuation is. You have to ask yourself, "why is this the case?" the fact of the matter is, there are plenty of people who know more about this situation than we do, and we haven't seen any that buying. Really? You think Ivey, Galfond, or any of the other odds-saavy people in the forum somehow magically got together to say they are boycotting this awesome trade where they can buy for 15 cents when it's actually worth 50? Really?!? I just don't understand how you can keep arguing this.
I even gave you a benchmark - Cake is OPEN FOR BUSINESS and the last week, I've seen it trade as low as 45 cents for a 5-figure size. All those sellers crazy too? And all the buyers not showing up for the same reasons?
I'm hoping you (and Whale) are smarter than everyone else and it really is worth 50+cents, since I have money on FT too. But I doubt it, because all evidence is to the contrary.
Analogy: a few years ago, there was an prestigious bank called Lehman Brothers. It traded as high as $86. We had the credit crisis and it started plummeting. TONS of people thought as you did, that all the sellers were retarded and panicky, and gave reasons x, y, and z for why there were no buyers. That at $30 it was an awesome buy, and at $20 and at $10 and even at $3. That it still had assets, too big to fail, yada yada yada. You know what? It is now a penny stock. All those "tards" selling at $10 are pretty friggin happy they sold there. A lot of the "lifers" got wiped out - you know, people who grew so attached to the money on their site and thought the thing *had to* go back up because it was "worth" more, all evidence to the contrary. Sound familiar?
So unless you somehow think you are smarter than everyone else, know more about the situation than everyone else (and there are tons of people out there with insider information, which we do not have) - both of which are highly unlikely - you're doing what we in finance call WAGing (wild-assed guessing). I just don't see how you can ignore the evidence when YOU are about as clueless as everyone else. Sorry if I've troubled you with the facts.
Do I think 15 cents is low? Possibly - Maybe it's worth 20-25 cents. But if given the choice of buying Cake at 55 cents or FT at 25 cents, I'm going to take Cake (and I have). What would you do?
Just to get Whale off of suicide watch, the only think I'll say for FT is that it's possible it can turn on ONE piece of news. But that event is unlikely.