pacmandefense

Uh…earth to Frank…the company is bankrupt and has been for several years. The issue is not doing a CFA-style valuation of the company. It’s evaluating the really bizarre machinations in this bankruptcy.
If I “ignore the hedge funds” then do I ignore the really extensive claims they have in bankruptcy that are ahead of the preferred? Of course, the hedge funds also own some of the preferred.
Anyway, “insight into the books” of a bankrupt company at this stage of bankruptcy is much easier than you might imagine. There is no longer any goodwill, off-balance sheet arrangements, toxic securities held as assets, etc. WAMU has been reduced to a pile of distributable cash. Now the issue is who gets it.
There is nothing in the CFA curriculum about distressed securities or bankruptcy - almost like CFAI doesn’t want to acknowledge that it exists. However, bankruptcies and defaults are picking up and if we go into a deep recession (something I think is very likely), there will be lots of these. It would be worth your time to read up a bit.