Talk about the Dow 10000
Interview: Wilbanks, Smith & Thomas---Wilbanks, Wayne---Chief Investment Officer (slow)
>> more now on our top story. a u.s. bankruptcy judge has approved world com’s plan to emerge from bankruptcy protection. the decision allows the company from now on, known as m.c.i., to leave $36 billion in debt behind. creditors owed more than $41 billion combined will instead receive shares in the new company. world com sought bankruptcy court protection in july of 2002 shortly after admitting to an $11 billion accounting fraud. it was the biggest corporate bankruptcy in u.s. history in case you had forgotten. joining us now by phone is david rozner. what’s your reaction?
>> i’m elate bid the decision. we had suspected that the judge would approve the plan. the plan should have been approved and i think it was both a legally correct decision and it was terrific that the judge did it so expeditiously.
>> how long were you―i mean, how long were you expecting this to take? we’re going back to july of 2002, are we not?
>> yeah. you know, even in the instance of a relatively small company, it’s extremely difficult to get a bankruptcy proceeding done in the time frame of a year and a half when you’re dealing with the largest company ever to walk into a bankruptcy court. it was terrific that the company under mike’s leadership was able to pull all the creditors together and get a plan done and on file. the plan was on file in april of 2003. that was less than a year after the filing. and then the confirmation went as smoothly as one could expect when, you know, there’s literally, you know, tens of billions dollars. so it’s fantastic outcome for the company.
>> what does that work out to? in terms of like pennies on the dollar for you the bondholder? what exactly do they expect to collect?
>> well, for most of the bondholders, most of the creditors will receive about 34 cents to 35 cents on the dollar that will be in the combination of stock or some new debt. the m.c.i. bond owners that i represent are going to creff 80 cents on the demrar terps of new debt that’s going to be issued by the company. the company is not walking out of bankruptcy with a completely get-free balance sheet ichtse going to issue about $5.5 billion worth of new detcht and it will be going out to its creditors.
>> all right. appreciate you joining us. and that is david rosner, counsel to m.c.i. bondholders. well, moving along here, stocks have posted gains for the month with two months left until the wrap-up of 2004. the s&p 500 is up 19.5%. the dow about 17.5%. and the nasdaq up over 45%. our next guest says the dow going back to 10,000 may be close at hand. wayne wilbanks is with wilbanks, smith & thomas and joins us from virginia beach, virginia. appreciate your time today. 6 let’s talk about that dow 10,000. we’re within 2% of that. we’re really not sticking out necks out too much here. how much further can it go? we could get 2% in a day perhaps.
>> just about. we’ve been bumping up against the 9700, mark. and with all the good news that’s come within the last 30 days, unexpected g.d.p. growth, huge mu equity fund flows, for those who watch those numbers. $4 billion a week in new fund flows coming in, which is something that we anticipated would happen and now it is happening. sew there’s huge liquidty drivers in this market. you’re right, not a huge feat to go to that value.
>> the what do you think about this whole situation with mutual funds? epidemic is far from over?
>> well, i think it may be a little bit of a parallel to last summer with the accounting scandal. i’m not saying this about bloomberg, but the media has really jump jumped on this. i think the act chule deed itself will be a distant memory by next summer as the accounting scandal has become from last summer. a lot of fanfare but not a lot of money involved at this point in time.
>> and at world com bankruptcy the summer before that, when will it ever end? are investors losing faith altogether?
>> i think what’s more important in this market right now is the economy, low interest rates, improving global economy, employment starting to look better. and, you know, these headlines, these are headline events, but they don’t really in the long are gong to really dictate what investors do in my opinion. i understand you told my producers that you like large cap quality stocks . you think people are going to start shifting over to higher quality stocks . we have 30 seconds left. why do you think that?
>> well, it’s the cheapest part of the market right now. these are names that people know and have loved in the past, whether it’s microsoft, johnson & jon son, your oil companies. these are big solid companies. businesses are doing extremely well. and they’ve really been left behind by this low quality rally.
>> do you own any of those shares?
>> microsoft and american international group, yes, we do
>> all right. appreciate your information. chief investment officer of norfolk virginia-based wilbank, smith & thomas mixed economic data out of the u.s. and europe today.
