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Illustration: Aïda Amer/Axios

Investors on the hunt for buying opportunities in equities probably haven't come across some of this year's notable success stories. That's because they are hiding in an illiquid, old-school market — and being traded by fixed-income desks.

Why it matters: After Chapter 11, many companies are left for dead by the broader investing community — keeping their comebacks under the radar due to the private market in which they trade. SPACs (special purpose acquisition vehicles) are increasingly starting to take notice as they search for targets to buy.

Case in point: J.Crew.

  • As the U.S. comes out of the pandemic, J.Crew's shares have nearly doubled in value over the last three months, Axios has learned.
  • J.Crew is now part of a shadowy group of retailers — including Neiman Marcus, JCPenney and Belk — that have gone through bankruptcy and now sit in a kind of ownership purgatory, with their equity held by a disparate group of former creditors.

By the numbers: J.Crew’s shares traded at $9 around March, and have moved up to $17 as the company’s earnings rebounded.

  • With approximately 100 million shares outstanding, the equity is now worth around $1.7 billion.

How it works: When companies file for bankruptcy, their creditors usually wind up with ownership. It’s the same idea as a bank taking over a house after the owner stops paying the mortgage.

  • In the case of companies, the creditors forgive some or all of their debt claims, and in return are given new private shares, or "reorganized equity."

The players: The reorg equities trade by appointment only. Buyers are often existing investors or distressed funds already tapped into the network.

Reality check: Some of the reorg equity holders never wanted to own it in the first place. Their ultimate goal is to sell the company outright or take it public.

The big picture: The plumbing remains antiquated in this corner of the world.

  • "It's a very thin market. The stocks are not listed somewhere, and you can't electronically trade them. It's ripe for disintermediation, like through the use of blockchain," Sanjeev Khemlani, leader of FTI Consulting's senior lender advisory practice, tells Axios.

The bottom line: J.Crew and others aren't meme stocks or SPACs (yet) — but they are real companies with real market capitalizations. They left the public market arena but may very well be back soon.

Go deeper

Miriam Kramer, author of Space
Sep 14, 2021 - Science

Inspiration4 launch: What the crew will do in space

Clockwise from left: Sian Proctor, Jared Isaacman, Hayley Arceneaux and Chris Sembroski. Photo: Inspiration4/John Kraus

When the Inspiration4 crew lives in space for three days, they'll do more than just sightseeing. The crew members also hope to perform experiments and fly a variety of sentimental items with them in space.

The big picture: This mission is like none that have flown before, but the crew is still planning to draw on the experiences of previous professional crews to help advance space science and attract the public to their cause.

Former Sen. David Perdue to launch bid for Georgia governor

Photo: Megan Varner/Getty Images

Former Senator David Perdue (R) plans to announce a campaign against Georgia's incumbent Republican Gov. Brian Kemp Monday, according to a source familiar with Perdue's thinking.

Why it matters: Perdue's challenge to his former ally Kemp sets up an unprecedented "scorched earth" battle between Georgia Republicans fueled by former President Donald Trump, in the battleground state. The news was first reported by Politico.

Updated 60 mins ago - Politics & Policy

Bipartisan tributes flood in for "giant of the Senate" Bob Dole

Then-Vice President Joe Biden and former Sen. Bob Dole at an event put on by the World Food Program where he was awarded the first “McGovern-Dole Leadership Award” in December 2013. Photo: Douglas Graham/CQ Roll Call

Republican and Democratic politicians, including former Senate colleagues, are sharing condolences and memories commemorating the life of Bob Dole, who passed away at 98 on Sunday morning.

The big picture: Dole, the Republican presidential nominee in 1996, was the longest serving Republican leader in the Senate until 2018, when current Senate Minority Leader Mitch McConnell surpassed his record.