There is no more common thing in any market: for every share of stock, for every bond, every option, for everything that someone sells, someone else buys. It is the ultimate difference of opinion: one person wants something enough to buy it while another thinks they're better off without that same thing. Experienced market participants take this in stride. After all, we know that when we buy or sell, we could be the one on the wrong side of the transaction. In an industry where opinions differ to the point of a buy or a sell, I understand that somewhere close to half of the universe of investment professionals disagrees with me at any moment. My colleagues and competitors know this too - it comes with the territory.

Yesterday, business editor Steve Sink of the Democrat & Chronicle published an article about the Eastman Kodak bankruptcy that mentions two scenarios for Kodak stockholders: a bonanza or a bust. In an illustration of the yawning chasm that sometimes separates opinions in the financial world, a California-based analyst claims that Kodak shareholders could see $10/share if the patent auction is successful. On the other side is my prediction that common shareholder will be wiped out in the bankruptcy.

Then I received this:


Not content with lecturing me via e-mail, Mr. Luskin also left voicemails for me and for my assistant in which he not-so-patiently explains that he knows "the facts" and will share them with me if I call. He also mentions that he "do(es) this for a living" by which I suppose he means investment analysis and not making crank calls on Sunday mornings. I agree with Mr. Luskin that facts are important, so let's take a look at a recent fact. Last week Kodak proposed paying its senior management bonuses if the company emerges from bankruptcy and pays off creditors. Writing for USA Today, Rochester-based reporter Matt Daneman notes that CEO Antonio Perez gets a $2 million bonus if creditors get back 30 cents on the dollar. It's a fact that a 30% recovery for creditors leaves little room for shareholders to get anything. Other important facts are that Kodak owes far more than it can pay for pension obligations, among other debts. If the patent sale goes well, Kodak's position would improve. But today's news casts the sale in a difficult light.

Regardless of my opinion or anyone else's, Kodak's bankruptcy will be done in less than 12 months. We'll know then how everything turns out, and whether shareholders walk away with wealth or lament their losses. Stay tuned.


(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).