Many individual investors are understandably upset about Kmart.

For those of you who missed the drama, here's what happened: The discount retailer fell on very hard times. Not only were the company's financials eroding due to competition with Wal-Mart and Target, but alleged fraud by the management team also put the company in a bind. As a result, Kmart entered Chapter 11 in 2002. It emerged from bankruptcy protection in 2003.
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Many individual investors are understandably upset about Kmart.

For those of you who missed the drama, here's what happened: The discount retailer fell on very hard times. Not only were the company's financials eroding due to competition with Wal-Mart and Target, but alleged fraud by the management team also put the company in a bind. As a result, Kmart entered Chapter 11 in 2002. It emerged from bankruptcy protection in 2003.

And it has been a very different company since then. Kmart was able to shed its detrimental loan agreements. It also emerged with a savvy new management team that knew how to extract value from the battered brand.

But as part of the restructuring, Kmart also cancelled its common stock. Shares of the old Kmart under the symbol KM expired with no value on May 6, 2003. This is actually a pretty common event when companies enter bankruptcy protection. Remember, as an owner of common stock, you are last in line for remaining assets in case of a default or other business failure.

But what makes this situation so difficult for owners of the old Kmart stock to handle is that the new Kmart then issued new stock under the name Kmart Holding, trading under the symbol KMRT. Shares of this new stock did extraordinarily well, gaining 26% this year. And get this: The stock gained more than 250% in just one year! Now the stock is under the symbol SHLD after the merger with Sears.

http://www.usatoday.com/money/...