I bought a Stock By Mistake
I invested in Whiting Petroleum $WLL a few weeks ago by mistake and it is already down 45%. Why did I do that? What will I do next?
Whiting Petroleum filed for bankruptcy in April this year and immediately on that day, they said how they were planning to come out of bankruptcy through a debt restructuring. The creditors were to be given 97% of equity.
At the time, when I looked at the company, I said that at the right price, it might be a good stock to buy. Of course, I took a massive margin of safety. Whiting Petroleum is an oil $OIL and gas company and with falling oil prices, it failed to meet its obligations. But out of bankruptcy, it has a better balance sheet.
Unfortunately, I could not invest in Whiting Petroleum as the stock price gained 1000% in weeks. But I set an order just in case, the stock price falls at the right price. It was a very small order of only $50.
It was hit on the day that the company came out of bankruptcy as the stock price crashed. On the following day, I invested a little more and now, 0.3% of my portfolio is in Whiting Petroleum. It is not much and I won't invest more.
The reason why I am holding on this stock is because it is still very cheap and if we're going to have higher oil prices, the stock price will definitely go up. But because the new management have yet to prove itself, I don't think investing more than 0.3% of my portfolio in it is worth it. Let's say, it is a 10 bagger, 0.3% can become 3%, but if it goes bankrupt again, I lose only 0.3%. You always need to understand the risk and reward of any investment.
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