Raw Greed requests, AMR Corporation

Posted on February 10, 2006 , filed under Stocks | Print This Post

Terry writes:

Is it time to short AMR or should I wait?

AMR, AMR Corporation has seen a phenomenal run up. I believe the jump in stock price is a little overdone. Oil prices have not eased up enough to warrant such a large increase in AMR’s stock price. There are still terrorism fears that loom and any negative news about a nuclear threat by Iran or speculation about possible terrorist attacks, has the potential to drive crude prices up and airline stock prices down rather quickly. Investors appear to be comfortable with the situation and AMR should continue to rise for sometime. I would wait until we see some reason and momentum behind a surge in crude prices before shorting AMR. I am watching AMR and will report back if I do decide to short shares of the company.

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Comment by John Smith

2006-02-14 18:48:18

I shorted AMR a while back and am waiting for it to come back down. There is absolutely no fundamental reason it should be as high as it is. Do some historical price analysis on the stock. Look at the 30 billion in debt, negative equity, and questionable profitablitiy this year. The business model is still broke. AMR will have the highest cost structure once Delta and Northwest restructure.

It appears to me that the analysts are blowing smoke to pump the stock up for the exec’s up coming bonuses, and so they can get the investment banking business when AMR issues more shares (which should dilute value) to clean up its equity on the balance sheet.

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