Paulson or No Paulson Speculators Are Loving CIT (CIT) Today

September 29, 2009 4:03 PM EDT

With so many moving parts it seems no one is quite sure what is going on with CIT Group, Inc. (NYSE: CIT). That being said, investors are still excited that something is about to happen and are bidding shares of the embattled lender higher anyway.

This morning, reports surfaced from the New York Post that hedge-fund powerhouse John Paulson is considering a plan to save the troubled lender through a merger with the leftovers of failed IndyMac Federal Bank. Cold water was later poured on this story from a number of sources, with one calling it "pure nonsense." according to Clusterstock.com.

After losing steam on the purported denial, shares of CIT picked back up on reports from Reuters the company is talks on a new $10 billion credit facility, which could help pay off maturing debt and stave off bankruptcy.

So while we don't know the details, and it is unclear even under the rosiest of scenarios if the common shares will have value, they are bidding the stock up anyway. Why not? Just look at AIG (NYSE: AIG). All fundamentals signs point to zero value for the common of AIG, but because it is a trading vehicle the stock goes higher anyway.

Shares of CIT closed up about 30%.

Real-Time Market Moving News Two-Weeks FREE http://www.streetinsider.com/premium_content.php

Related Categories

Insiders' Blog
Trader Talk

Stocks Mentioned

Related Entities

• Paulson & Co. (PCI)
• Bankruptcy

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?