Odds and Ends: Tech companies, post reorgs

Yesterday, I posted about investing in tech companies. Lo and behold I find some more stuff that ties into it today. The click whores over at Fortune have a piece on turnarounds. If you want to spare yourself to annoyance, the companies are Yahoo, Myspace, AOL, Nokia, and Digg. I don't want to relegate these guys to the trash heap, but they all are victims of change in the technology world. I don't think Myspace or Digg were ever fantastic businesses, but Yahoo, AOL, and Nokia all have had their moments in the limelight. While companies on the decline are not unique to the tech sector, the aforementioned companies have all fallen from the peaks quite quickly.

I've been doing a lot of digging around with post reorgs. They're all the rage these days. Dan Loeb has some interesting thoughts, especially on AbitibiBowater, in his most recent letter on post reorgs. One thing that has been part of the learning curve was locating financial information on the companies. Kurtz Carson Consultants has info on the court proceedings, but the financial disclosures are lacking. I did some digging and came across this older post on Distressed Debt Investing. The entire post is a pretty good primer on post reorg equities and why they offer value. I found my answer to the financial data part there as well:

Gathering information on post-reorg equities might be challenging as well. During the bankruptcy process, companies generally don’t host conference calls, rarely make public appearances at the conferences and sometimes do not file 10Ks and 10Qs with the SEC. To understand the company’s post-emergence capital structure and newly issued securities, it is imperative for an analyst to read the Disclosure Statement filed with the bankruptcy court which includes financial projections, the company’s new capital structure as well as liquidation and valuation analyses. Analysts can also look at the company’s Monthly Operating Reports, also filed with the court, for more detailed monthly financial data. All these documents are available to the public from the electronic court filing system PACER (http://www.pacer.gov/) for a small fee. However, even though the information is accessible, most non-distressed investors tend to be unfamiliar with PACER and bankruptcy documents, thus often neglecting post-reorg equities altogether.

And so the answer is PACER (Public Access to Court Electronic Records. It costs $.08 a page, capped at $2.40 per document. I suspect that this is one of the more worthy costs to stomach when it comes to investing considering the rewards that can be reaped with post reorg investing. I'm going to sit down and dig around PACER and figure out how to use it. The market dynamics of post reorgs are so compelling to nimble individual investors. The DDI article does a good job discussin the benefits. As always, Greenblatt's You Can Be A Stock Market Genius is the best book for this subject and a couple other good investing techniques.

Talk to Andrew about tech companies and post reorgs