Visteon Trade

Visteon filed for Chapter 11 protection in mid-2009. It has been undergoing substantial dispute on the reorganization structure b/w different stakeholders. What is special about this case is its valuation received much dispute due to record profit in Q4'09, continued profitability in Q1'10 and hidden assets in its balance sheet.

In theory, it is a solvent company despite laden debt burden that appears to leave significant value for the shareholders. This has attracted numerous hedge funds' investments and buyers Johnson Controls in attempt to unlock value of the company.

My position in this trade has gone out of hand due to my averaging down strategy. It has become an abnormal high % of my total portfolio that I am not very comfortable with though I still believe in the investment thesis.

This trade happens to be a relatively risky bet despite substantial upside can possibly be realized. Downside has already be floored by the management's newly revised Plan Of Reorganization (POR) that will offer 1.94% to the common equityholders with around 3% in warrants.

Now it comes down to the ultimate valuation of the company as the Judge has been clearing way for the final showdown.