Author Topic: EGFEY - Eurobank  (Read 142513 times)

LowIQinvestor

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Re: Eurobank - EGFEY
« Reply #10 on: May 09, 2014, 07:34:30 AM »
I thought the ADR/Ordinary ratio was 2:1 ?

http://www.adrbnymellon.com/dr_profile.jsp?cusip=26844B209

"Ratio DR:ORD   2:1"

Am I missing something?


gary17

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Re: Eurobank - EGFEY
« Reply #11 on: May 09, 2014, 07:38:36 AM »
It is...

so ADR = 0.205 this morning (earlier)

1 common based on ADR = 2 x 0.205 / 1.38 = 0.30 

but the real commons are trading at 0.35 

Gary


TwoCitiesCapital

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Re: Eurobank - EGFEY
« Reply #12 on: May 09, 2014, 07:39:29 AM »
Large spreads can occur between ADR securities and the underlying shares because often times people are unable to take advantage of the arbitrage.

This happened with Bank of Ireland a year or two ago. Melon Trust "closed the book for issuance" which means that common shares weren't convertible to ADRs or vice versa for an extended period of time. The spread collapsed the day the book was reopened and spread shortly after it was closed again. My guess is that it's a similar dynamic here or you're simply dealing with a liquidity premium.
« Last Edit: May 09, 2014, 07:48:16 AM by zachmansell »

gary17

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Re: Eurobank - EGFEY
« Reply #13 on: May 09, 2014, 07:48:03 AM »
So the higher liquidity provides premium?

in Bank of Ireland's case the ADRs were at a premium - in fact, they are still at a slight premium today, although the gap did close.  It was much wider before.

In this case the ADRs are at a discount. 

Gary

gary17

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Re: Eurobank - EGFEY
« Reply #14 on: May 09, 2014, 07:49:57 AM »
the price difference is not the thesis here.... btw.... 

the thesis is it's a private bank , very well capitalized, in Greece, with Prem and Wilbur on the board, and a turn around story.......   the discount is just a nice thing to have...

TwoCitiesCapital

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Re: Eurobank - EGFEY
« Reply #15 on: May 09, 2014, 07:50:41 AM »
So the higher liquidity provides premium?

in Bank of Ireland's case the ADRs were at a premium - in fact, they are still at a slight premium today, although the gap did close.  It was much wider before.

In this case the ADRs are at a discount. 

Gary

Yes. Higher liquidity is sold at a premium to shares that have no liquidity. It doesnt have to be the same as the bank of Ireland ADRs just because it appears similar. I have no idea why the spread between the two grew so large but I definitely know why it didn't close in a short period of time.

jrallen81

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Re: Eurobank - EGFEY
« Reply #16 on: May 09, 2014, 09:17:06 AM »
dumb question, but how do you check the ratio of ADRs to common?

jrallen81

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Re: Eurobank - EGFEY
« Reply #17 on: May 09, 2014, 09:21:20 AM »
also, if you buy right now at 0.23, that's only a $0.02 discount to the ADR price from the close, 8% isn't bad, but not -15%, so watch the pennies!


gary17

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Re: Eurobank - EGFEY
« Reply #18 on: May 09, 2014, 09:40:31 AM »
Yes, I got a large limit order at about 0.205 for the last few days - i have not been loading up as fast as I'd like to.  Oh well.

some more points:

i believe all other Greek banks are trading well above book...   so this is the only one below book...

Gary
« Last Edit: May 09, 2014, 09:47:17 AM by garychen17 »

Hielko

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Re: EGFEY - Eurobank
« Reply #19 on: May 09, 2014, 11:48:52 AM »
This probably should trade at a discount to the shares in Athens. You most likely incur a ADR fee of 0.02 dollar/year which is 8.5% in fees every single year and a conversion probably costs 0.05 dollar which is 21%. There is absolutely no way I would want to own this ADR at a 15% discount; it's overvalued relative to the Greek shares instead of undervalued!