The corpses have been dancing in the graveyard of dead banks. Shares of Washington Mutual that trade on the pink sheets – reluctant as we might be, we’ll provide the ticker after all: WAMUQ – have jumped 42% in Monday’s trading session, reaching 35 cents a share.
That’s the highest the debris left over from last year’s bankruptcy and forced-sale to JPMorgan (JPM)has commanded in pink-sheet trading sincebankruptcy was declared Sept. 25. Friday would mark one year to the day since the bank’s collapse.
It’s difficult to say what the value these buyers have identified in the worthless hull of the bank’s parent company. There’s no operational assets associated with what remained of the parent company after the operating company was sold. In some cases, investors effectively have played a lottery ticket, figuring there’s little risk to purchase shares of something trading at a fraction of a dollar if there turns out there’s even marginal value left at the parent company.
Volume has spiked dramatically in Monday’s trading session, with 60 million shares changing hands, or about six times the daily average.
Investors have periodically played these zombie companies, betting on some leverage to a banking recovery or an economic revival. But it’s a game that’s freighted with some dangers: investors holding the stock when the music stops get stuck with a worthless investment.
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