Calling Martha Stewart fans

[K60]

Some of my WS friends and I are trying to get a handle on whether Martha Stewart's company is investable given the hot water she's in over the insider trading thing. I contend that female fans of Martha (myself included) will not abandon her and her great products if she ends up being embarrassed or has to make restitution or some sort of plea agreement. She has steadfastly denied that she did it, but things look bad on her broker's end.

Her company (which is a very solid company) stock is down huge since this story broke and people are shorting it aggressively, yet I think that might be a mistake because her targer market doesn't give a damn if she sold her Imclone stock on insider information so long as she keeps selling us those cool cookie cutters and doodads.

So, give me a vote. Are you going to quit shopping Martha? Do you care at all about the insider trading thing?

 

[trevor]

My cousin works for her television show and supposedly she's a very nasty person but that's all I know about her. As far as her company it's a tricky question as is the entire market game. You could risk it and buy some now at it's lower price(where is it now?) and hope it comes back. In that case, you obviously get a good deal. I think most people will continue to follow her and buy her stuff but she may never get back to the level she was before.
I'll throw a carrot out here....a certain Md.-based chemical co. currently in bankruptcy in order to cap asbestos liabilities will come out of bankrupcty in perhaps 2-3 yrs. I expect that stock to multiply in price by 6-fold over what it is now at that time.
Trevor

 

[K60]

I know who you're talking about, I think.

Trouble is, in Chapter 11, they often cancel the equity and issue new stock. You're better off holding the debt (bonds) than the common stock. You better take a look at the plan of reorganization to see how they are going to treat the shareholders under a reorganization.

 

[Debra]

RE: Martha Stewart

Martha's gotten herself into quite a mess over what is a pittance for her. Her broker is in trouble because it appears he & Martha concocted the sell order story. His assistant broke when the Feds started asking questions. Another of Martha's "dear" friends also made a timely sell after communications w/ Martha. Wasn't Stewart a broker at some point? Anyhow she's certainly familiar w/ the rules.

Investors are fleeing from any stock that is tainted with scandel. This incident highlights the long-term concern that Martha's companies are nothing without Martha. But if one likes to gamble, this might be an opportune time to invest in the stock.

You're right, consumers don't give a fig about her financial misstep. But that doesn't mean that the investment community will place great value on consumer loyalty.

So Trevor, is there going to be a single group settlement on asbestos issues like the tobacco settlement or is each company settling?

Debra

 

[trevor]

[font size="1" color="#FF0000"]LAST EDITED ON Jun-29-02 AT 01:23PM (Est)[/font][p]It's a special situation since the only reason for filing was to stop the frivolous lawsuits and piling on that was occurring. I'll look at the reorg a little closer like you suggested. I do know that federal law protects the savings and investment plan.
Trevor

 

[trevor]

RE: Martha Stewart

[font size="1" color="#FF0000"]LAST EDITED ON Jun-29-02 AT 01:37PM (Est)[/font][p]Hey Deb!
Right now companies are getting creamed by people who aren't even sick filing lawsuits. And as more and more go the Ch. 11 route to escape the frivolity, that leaves fewer and fewer so-called solvent companies left to bear the burden. The whole idea of Ch. 11 is to find a way to deal with the financial obligation of paying people who are legitimately sick. Most, if not all, asbestos makers are in Ch.11. Next up are companies that used products that contained asbestos. In the case of, if you guessed it, W.R. Grace...the company I work for, we had to go Ch.11 because of unending lawsuits pertaining to Zonolite Attic Insulation. That product was big in the sixties and seventies and contained a trace amount of naturally occurring asbestos. There are legitimately sick people who worked for Grace in the mines out in Montana who helped manufacture that stuff. These types of people are the ones Grace is trying to pay. Legitimately sick individuals. One caveat to this is Grace followed federal regulations that were in effect at the time....yet still is required to pay. If you are a company with a product nowadays and you expect to be around a while, the product had better be able to pass federal regs., limits, etc., AS THEY CHANGE OVER TIME, until the END of time basically. Seems ridiculous in that regard but Grace wants to help the legitimately sick people. That in itself is hard to do when people who aren't sick are trying to get it on the action also. In some ways it's another example of how litigious this country is. Too many lawyers!
T.
T.

 

[K60]

RE: Martha Stewart

[font size="1" color="#FF0000"]LAST EDITED ON Jul-01-02 AT 01:40PM (Est)[/font][p]Trevor: The witch hunt for any company that can be tagged for asbestos has really become amazing, no doubt. Halliburton, Georgia Pacific . . . amazing.

Since you've seen that a lot of these lawsuits which don't relate to mesothelioma claimants are just ridiculous and run through plaintiff "mills," I thought you might find this link interesting. This sleazy law firm had a script for their asbestos "plaintiffs" to follow when deposed as to their alleged injuries.

http://www.dallasobserver.com/issues/2001-03-29/feature.html/page1.html

P.S. With regard to your comments on the other company, my comments were regarding the common stock of the company. If you have an ERISA retirement plan there, of course, that is protected. However, if your plan holds the common stock of the company as an investment, again, if we're talking about a significant amount of money, you might want to get a copy of the plan of reorganization and have a bankruptcy lawyer look at it to be sure that the stock survives the reorganization at its full value.