How To Short BBEPP Stock And Run To The Bank

How To Short BBEPP Stock And Run To The BankThis is all about how to short BBEPP stock until the bankruptcy.  Let me start with the fact that they have not announced any bankruptcies, but this stock is going to get hammered today.  They have just publicly stated that they are stopping all payments on their preferred 8.25% Series A Cumulative Redeemable Perpetual Preferred Units, which is the BBEPP stock ticker.  They have also decided to suspend the 8% Series B Perpetual Convertible Preferred Units as well as the interest payment of approximately $33.5 million due today on its 7.875% senior notes due April 2022.  This is absolutely HUGE news going forward for those looking to short this stock.
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They have also hired Lazard Frères & Co. LLC as its financial advisor and Weil, Gotshal & Manges LLP as its legal advisor during these times of turmoil in order to help them either survive or plan for a bankruptcy.  If it is the latter, you will be looking at further decreases in share price, which could be a huge opportunity for the short market.  The bad thing about this stock today is that the easy money has just been made with BBEPP opening today down more than 20% for those that had it short before the announcement.



As for plays on this stock going forward, they still have 30 days to make any payments that are outstanding in order to avoid a default.  It doesn’t make much sense to me that they would make these payments when the company would know that the stockholders share price would get hammered today with this announcement.  It looks like they are going broke to me and are figuring out what life preservers they have left in order for them to stay solvent.  You can see that every dollar counts at this stage of the game when the preferred shareholders are cut out of the loop.  It is not going to look good today for those shareholders that are going long with this stock.  I expect a steady decline throughout the day as shareholders decide what to do.  I feel as though you have seen its high for the day when it opened and there is nowhere to go but down for the next few hours, if not days.



The oil industry has been getting crushed over the last year and many companies are going to fold because of bad balance sheets.  You can see many banks putting more money aside for the bad loans they have made to the oil industry.  This is a sure sign that more companies will be following in BBEPP’s step in the very near future.  When the dust settles, you will have tons of defaults that will decimate shareholders of said companies.  The idea of trying to catch a falling knife does not sound very appealing with this stock, so my play is to short it and wait for the inevitable bankruptcy announcement.  When you are wondering how to short BBEPP stock, I think it will be a short it and wait for more bad news to come to the headlines for the shareholders to squirm over.

UPDATE 4-15-16:  This was WAYYY to easy.  This stock came down from the original mark in a hurry and never looked back.  It gave up another 6% today, adding to yesterday’s easy pickings.  At this point, it is high to lock in 90% of the profits and hold on to the other 10% just in case there is more declines in the near future.  Congrats to all those that were on the right on of this play.

How To Short BBEPP Stock And Run To The Bank

Comments

  1. Great pick! I got in at 3.79. She’s at 3.00 now and still dropping.

    • Stock Moe says:

      I am glad to hear you made out well. Even the other ended up like I predicted. That is 7 in a row so far. Just saying. :)

  2. rmonoski says:

    It was easier money then the VYGR, that is why I switched. It is easy to pick the dogs over the longs sometimes. Just be prepared to cut and run to lock in the profits. I see bad things for this stock, which we are seeing. I would lock in 50% by the end of the day, if not more. I like to keep the bird in the hand when possible. Congrats on the win.

  3. You freaking nailed this and the other one. Thank you for the picks…made 20% on bbepp then covered 80% Did similar thing with the pharm pick too. You are really good. Thank you…seriously.

    • Stock Moe says:

      Thank you. I am glad to help. Remember that these are ultra high risk shorts and not to be done without proper research. Congrats on the cash though. 😉

  4. What broker do you use for shorting? Every time I try to short one of your recommendations, my broker never has any to borrow. Thanks.

    • Stock Moe says:

      That is the problem with some of these smaller companies. I have recommended having accounts in multiple brokerage firms in order to eliminate or at least reduce the amount of times that shorting is not an option. Check the online brokers, such as Etrade, Ameritrade, Trade Kings…etc, and maybe some local branches such as Ameriprise and Merrill Lynch. Most of the time though, the stocks should be available to short. I have also suggested buying put options when the shorting is not available for a particular stock. Thanks for writing…Moe

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