Why investors gamble on shares of bankrupt companies

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Why investors gamble on shares of bankrupt companies
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“Anyone who buys and holds the stock of a bankrupt entity is almost assuredly going to lose their money,” says bankruptcy lawyer Howard Ehrenberg.

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The recent movement in Bed Bath & Beyond Inc.’s stock has shone a spotlight on the attraction that bankrupt companies hold for some investors.

Bed Bath and Beyond’s BBBYQ shares have risen 30.7% in the last month, outpacing the S&P 500’s SPX gain of 2.9%, despite the bankrupt home-goods retailer’s well-documented woes. Bed Bath & Beyond filed for Chapter 11 bankruptcy protection in April and was subsequently delisted from the Nasdaq exchange. Trading over the counter since May 4, with liquidation sales under way at hundreds of stores, the stock nonetheless continues to attract attention. Since the bankruptcy filing, investors have spent almost $200 million trading “theoretically worthless” shares, the Financial Times reports.

Related: Bed Bath & Beyond investors have spent $200 million trading ‘worthless’ shares — will this holding company help them?

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