Horsehead Holding Corp. on Tuesday filed for Chapter 11 bankruptcy protection, as we reported earlier. Shares of the company were trading at as much as $20 a share only a few months ago in August 2015, today shares dropped 57% in NYSE trading to $0.11 a share. The stock was a holding of many value investors including Mohnish Pabrai who sold out recently after taking a big loss. Many have been critical of Pabrai’s investment in the company. One twitter user mocked Pabrai who is known to use checklist and use the phrase “heads I win, tails I do not lose much” with the following comment.
- Capital intensive: check
- Highly cyclical: check
- Heavy financial leverage: check
- No competitive advantage: check
- Labor force unionized: check
- Industry subject to heavy regulatory oversight: check
- Company in midst of turnaround: check
- Has the industry benefited from macro tailwinds in last few years (low oil prices, cheap auto loans, etc): check
I cannot believe I found a company that passed all my checklist criteria. I am going to put 50% of my money in this and cannot see how I can lose money.
Heads I win, Tail I