Speculators Hit The Exits On CIT Group (CIT)
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Shares of CIT Group, Inc. (NYSE: CIT) are trading near the lows of the session as speculators view news of a debt exchange or pre-packaged as a death-knell for the common shares.
CIT is looking at one of two options: a deal with bondholders to swap the debt for new debt and/or equity or a pre-packaged bankruptcy. A decision could be made Thursday or Friday.
In either scenario the current common shareholders could be entirely wiped out.
Shares of CIT are down 46% to $1.19.
Speculators have recently been playing the stock on hopes there would be value in the CIT equity after reworking its debt. In fact, yesterday shares of CIT rose 32% on reports that hedge fund guru John Paulson would merge the company with the leftovers of failed IndyMac. This appears to have just been a bogus rumor.
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Bogus rumor
Frank on Sep 30, 2009 04:21 PMThe rumor yesterday 9-29-09 about paulson hurt many investors...today i wonder if they sleep well at night. Remember everything comes full circle.