DJ Horrigan got the shock of his life this week when he saw Kmart ( KMRT) crossing on the Nasdaq at more than $20 a share. The Des Moines, Iowa, resource manager thought the stock was cheap two years ago when he paid $2 apiece for several hundred shares, betting on a turnaround. It proved grossly overpriced, of course, going to zero after the company filed Chapter 11 in January 2002. Now it's back, trading for a spiffy $18.50 one month after reappearing on the OTC bulletin board at about $14. "When I found out that my stock was worthless while other people were buying new stock at over $20, I felt kind of betrayed by the organization," Horrigan said. "I'm not buying the new stock. I helped them once, and that is enough."
Doomed to Repeat It
Skeptics say Kmart's latest crop of investors would be wise to consider Horrigan's plight. "Once burned, twice shy," said Marie Driscoll, a retail analyst at Argus Research Group. "All retailers are suffering now. Why would someone holding worthless Kmart shares step back into something like that now? I wouldn't. For Kmart to come out of bankruptcy in an environment like this is suspect to me." Kmart emerged on May 6, having shed $7.8 billion in debt. Creditors got the haircut. Julian Day, the former Sears ( S) executive tapped to run Kmart in early 2002, announced on Tuesday morning that shares had been approved for trading on the Nasdaq.