NBG - National Bank of Greece

[mrvlad0]

Fitch Ratings has upgraded National Bank of Greece

 

http://bit.ly/10JAIE7

[SharperDingaan]

We copied this over to keep all the content together. As of this morning, NBG is trading at $2.00 on the NYSE.

 

The attraction of a nano- cap is the low price, large number of shares for an investment of $X, & a multi-bagger payoff if it works out.  For most investors it is part of the learning process, & usually not a success.

 

To speed up your learning you might want to consider the bigger, & more established companies. Consider a $1,000 gross investment in NBG:US  (National Bank of Greece), followed by second $1,000 investment 3 months after recapitalization (if there is one). NBG  ADR`s trade on the NYSE for $.89; 3 months ago they were $1.80. The major changes in those 3 months have been a stalled recapitalization (of which FFH is a participant) & the collapse of the Cypriot banks.  http://web.tmxmoney.com/quote.php?qm_symbol=NBG:US.

 

A real company, that a known value investor has been tyre kicking, with possibly a 1.5B investment (or more). No liquidity issues, a little better than two guys and an `idea` dressed up in a marketing pitch, & a straight up investment thesis; Greece cannot survive without at least a semi-public NBG. Bush league or real practice; where is your $2,000 tuition fee likely to give you the better bang for the buck?

 

Re disclosure: We do not hold a position in NBG, we refer to NBG only for illustrative reference, & we are not advising a purchase. The choice to pursue NBG further is entirely your own decision.

[BargainValueHunter]

http://gdpinsider.com/stocks-declining-national-bank-of-greece-adr-nysenbg-dynavox-inc-otcmktsdvox-1645.html

 

National Bank of Greece (ADR) (NYSE:NBG) opened at 2.16, down on its previous close of 2.39 and market valuation currently sees the stock trading down 31.80%. The range for NBG is 1.33 and 2.17 and volume is 36.761 million—a 516.67% increase on average volume of 5.968 million.

 

NBG has a market cap of $1.59 billion but has been undergoing reorganization of its capital structure. The bank announced recently that it is set to sell 2.27 billion new shares at a price of $5.50. The price is based on calculations of a 1-for-10 reverse stock split.

 

Shareholders had earlier agreed to go ahead with the recapitalization plan for NBG, which had seen a steady climb northward on its technical chart. The recent dip now means that NBG is trading 54.46% below its 52-week high of 3.25 but still up 142.61% on its 52-week low of 0.61.

[SharperDingaan]

Our nano-cap investor should have learnt 3 things so far, with more to come ...

  (1) Invest in quality (relative to most nano-caps). Things happen quicker and more reliably.

  (2) Don't be greedy. Sell 50% every time you double.

  (3) Nano-caps price off emotion, not rationality.

 

NBG:US closed on the TSX at $1.58, May-17. If the $5.00 recapitalization, & 10:1 consolidation is accurate; NBG:US should trade at no more than $0.50/share. You could only get $1.58 or higher, if the meaning of the Fitch rating is being misinterpreted; post recapitalization is not today's world.

 

If it is actually a 20:1 consolidation combined with CoCo bonds, NBG:US would price at $0.25 or less. Most would expect that when final terms are announced, the supply of NBG:US shares will greatly exceed the demand for them, & they will close well below the $0.25.  Possibly 40-60% below.

 

Our nano-cap investor is about to learn nimbleness ....

 

SD

 

 

 

[Kraven]

Our nano-cap investor should have learnt 3 things so far, with more to come ...

  (1) Invest in quality (relative to most nano-caps). Things happen quicker and more reliably.

  (2) Don't be greedy. Sell 50% every time you double.

  (3) Nano-caps price off emotion, not rationality.

 

NBG:US closed on the TSX at $1.58, May-17. If the $5.00 recapitalization, & 10:1 consolidation is accurate; NBG:US should trade at no more than $0.50/share. You could only get $1.58 or higher, if the meaning of the Fitch rating is being misinterpreted; post recapitalization is not today's world.

 

If it is actually a 20:1 consolidation combined with CoCo bonds, NBG:US would price at $0.25 or less. Most would expect that when final terms are announced, the supply of NBG:US shares will greatly exceed the demand for them, & they will close well below the $0.25.  Possibly 40-60% below.

 

Our nano-cap investor is about to learn nimbleness ....

 

SD

 

 

 

Who are you referring to?  Who is "our nano-cap investor"?

[Uccmal]

I have been following NBG loosely for some time now.  I am waiting until after the recap to see where the dust settles.  Its too confusing right now. 

 

They do have capital.  They have been buying in pref. shares to raise their Tier 1 core capital. 

 

They also absorbed the operations of a smaller bank in Greece. 

 

So we wait.

[PlanMaestro]

http://farm8.staticflickr.com/7347/8759585691_5ddec8ba1b.jpg

[SharperDingaan]

Who are you referring to?  Who is "our nano-cap investor"?

 

We had originally posted on a nano-cap investing thread, & advised that looking at the beaten down bigger companies would be a better learning experience than focusing on the traditional 'penny stock'. We cited NBG:US as the bigger company example.

 

Of course NBG:US will eventually pay a dividend (years from now), & if your cost base is only $5.00 .... it will not take that long for the cash yield to become very respectable.

 

 

[Kraven]

Who are you referring to?  Who is "our nano-cap investor"?

 

We had originally posted on a nano-cap investing thread, & advised that looking at the beaten down bigger companies would be a better learning experience than focusing on the traditional 'penny stock'. We cited NBG:US as the bigger company example.

 

Of course NBG:US will eventually pay a dividend (years from now), & if your cost base is only $5.00 .... it will not take that long for the cash yield to become very respectable.

 

Ok, I see, thanks.  I don't think I would agree with your points (as to which is a better learning experience), but it's debatable.

[SharperDingaan]

The context of the nano-cap thread was making money invested in penny stock, whereas the reality is that most often you will lose your shirt & gain 'experience' instead. NBG:US was put forward as it was priced < $1.00, qualified as a 'penny stock', & the experience would have greater application - & occur a lot quicker. So far, as a learning experience, it has been pretty good.

 

Penny Stock, or NBG:US (as it currently is); both are the bottom 10% on the quality scale. More telling, is that dominant established companies (& occasionally banks), can at times - also be a penny stocks (Lesson #5).

 

 

 

 

[Kraven]

The context of the nano-cap thread was making money invested in penny stock, whereas the reality is that most often you will lose your shirt & gain 'experience' instead. NBG:US was put forward as it was priced < $1.00, qualified as a 'penny stock', & the experience would have greater application - & occur a lot quicker. So far, as a learning experience, it has been pretty good.

 

Penny Stock, or NBG:US (as it currently is); both are the bottom 10% on the quality scale. More telling, is that dominant established companies (& occasionally banks), can at times - also be a penny stocks (Lesson #5).

 

I don't understand.  Why most often in a penny stock would you lose your shirt?  Are you using penny stock in a pejorative manner to imply something sketchy or simply to refer to it being a low priced stock of a smaller company?  If the former, then obviously I agree with you, although I would hope anyone on this board is smart enough to refrain from purchasing something like that.  If the latter, I would not agree with you.  NBG is a complicated foreign bank.  There are tons of small companies with low share prices that I could list out that are much easier to understand and analyze then NBG, including dozens of community banks.

[SharperDingaan]

Simply a share with a cost < $1.00.

 

Wide range of choice: Beat up complex bank through to little more than a promotion. 

 

Short learning period: Agreed there are simpler & easier 'buy and hold' choices; but with a volatile and complex choice - you will probably learn more in 4 months than you would otherwise learn in 2 years. You are not learning clinical valuation, it's the aromatic armpit stuff, & just as valuable.

 

While a necessary step, in their early days, many value investors probably spend far too much time and tuition in the Penny Stocks. We were lucky enough to eventually meet someone who corrected our ways, but it had been a very expensive trip until then. We're just passing on the favor.     

 

 

[Kraven]

Simply a share with a cost < $1.00.

 

Wide range of choice: Beat up complex bank through to little more than a promotion. 

 

Short learning period: Agreed there are simpler & easier 'buy and hold' choices; but with a volatile and complex choice - you will probably learn more in 4 months than you would otherwise learn in 2 years. You are not learning clinical valuation, it's the aromatic armpit stuff, & just as valuable.

 

While a necessary step, in their early days, many value investors probably spend far too much time and tuition in the Penny Stocks. We were lucky enough to eventually meet someone who corrected our ways, but it had been a very expensive trip until then. We're just passing on the favor.     

 

 

 

Aromatic armpit stuff - that's quite a visual!  I think in general I understand your point, but would disagree.  I don't think there is anything inherent to penny stocks (defined solely as cheap shares) that makes them more risky than anything else.  It would also depend on what risks we are talking about.  There are penny stocks with risk and there are very large companies with risks.  I would posit that in many cases the risks with respect to a "penny stock" (as we are defining it) are easier to understand than the risks with a large multinational company.

[muscleman]

I just had a quick glance to their 20-F.

They have a negative $8bn equity. If I deduct goodwill and intangibles, it is a negative $12 bn.

According to the recent recap plan, $12 bn will be raised, so their pro forma tangible equity will be $0, and this assumes that the derivative assets and derivative liabilities are actually accurate.

It doesn't look like a safe investment for anyone. :)

[SharperDingaan]

Agreed it is different risks, but that is a whole different conversation.

When the crowd around you is irrational, & essentially rioting, its more about learning how to keep your head; but it cannot happen unless you actually experience it - you have to smell those aromas (fear & greed), experience the tear gas (actual restructuring), and feel the ground shake (stampede to sell)! Something probably quite familiar to both Soros (Hungary), & Taleb (Lebanon).     

 

We're pretty sure that fine minds will make the negative $12 bn disappear in the restructuring. The real question is if it comes back later; & how many of those folks tossing the black worry beads -  choose to bank with them afterwards (after all it is Greece). We would suspect that for the first few years, banking discipline is going to be enforced the old fashioned way; and authorities are not going to moderate. 

 

 

[muscleman]

Agreed it is different risks, but that is a whole different conversation.

When the crowd around you is irrational, & essentially rioting, its more about learning how to keep your head; but it cannot happen unless you actually experience it - you have to smell those aromas (fear & greed), experience the tear gas (actual restructuring), and feel the ground shake (stampede to sell)! Something probably quite familiar to both Soros (Hungary), & Taleb (Lebanon).     

 

We're pretty sure that fine minds will make the negative $12 bn disappear in the restructuring. The real question is if it comes back later; & how many of those folks tossing the black worry beads -  choose to bank with them afterwards (after all it is Greece). We would suspect that for the first few years, banking discipline is going to be enforced the old fashioned way; and authorities are not going to moderate.

 

If I remember correctly, other EU banks got recapitalized more than once, so I wouldn't be surprised if this bank does so as well.

[jrallen81]

As and ADR holder, my broker automatically sold the rights, arrgh. Anyone following this situation closely with comments about buying (in my case re-buying) the rights?

[compoundinglife]

As and ADR holder, my broker automatically sold the rights, arrgh. Anyone following this situation closely with comments about buying (in my case re-buying) the rights?

 

I believe they are sold automatically because there is a legal issue preventing foreign holders from participating. Someone on the board might have more details but I looked into briefly when NBG did a rights offering a few years back.

[compoundinglife]

Tendering for half of the outstanding prefs at 12.50:

 

http://www.reuters.com/article/2013/05/31/greece-nbg-idUSL5N0EC1V120130531

[ericd1]

PFD's had a 25% move in the last five days...Hummmm

[king888]

http://google.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=9356346-762-7919&type=sect&TabIndex=2&companyid=96614&ppu=%252fdefault.aspx%253fsym%253dNBG

 

Based on all the above, 2,022,579,237 new, common, registered, voting shares of the Bank will be disposed of by the Bank’s Board of Directors to the Hellenic Financial Stability Fund in the context of the In Kind Share Capital Increase, which shall be subscribed by contribution in kind.

 

 

In view of the above, the total share capital of the Bank will be increased by €682,237,762.2, through the issuance of 2,274,125,874 new, common, registered, voting shares of nominal value €0.30 per share. Accordingly, the Share Capital Increase of the Bank will amount to €2,076,535,798.2, divided into (a) 2,396,785,994 common shares of nominal value €0.30 each, (b) 25,000,000 redeemable, preference, registered, non-voting, non cumulative shares of nominal value €0.30 each and © 270,000,000 redeemable, preference, registered shares of Greek law 3723/2008, of nominal value €5.00 each.

 

Now , NBG has 2,396,785,994 common shares. The preferred shares will be tendered and I don't include the preferred to the calculation. Now share price is  ~$4 which is almost the same price as the offering (3 EURO). This is roughly $9.6 billion market cap company.    Total Asset is $104 billion . And NBG has a lot of oversea operation also. 

 

What do you guys think ?

 

 

[SharperDingaan]

Most would expect a consolidation to push the share price high enough > 5 Euro, to allow institutions to hold it. It is also in the NBG interest to consolidate aggressively, & issue a solid cushion of convertible CoCo bonds. Consolidation to around 160-240M shares.

 

 

[BargainValueHunter]

Down 27% pre-market:

 

http://247wallst.com/2013/06/27/one-more-implosion-for-national-bank-of-greece/

 

The short sellers in America were already pounding on the National Bank of Greece S.A. (NYSE: NBG). Just on Wednesday we pointed out that the troubled Greek bank’s American depositary receipts (ADRs) in New York trading were the third largest short sale increase in terms of percentage. Now shares are getting destroyed all over again on reports that Greece may consider lifting or loosening up a ban on the short selling of the nation’s banks.

[enoch01]

So they are panicking less about short sellers.  That seems like a good thing.

[SharperDingaan]

The only way an old shareholder can get out in volume, is to offer it to a new shareholder at a very deep discount ... minimum 20-25%. HFT effects are exaggerating the momentum, & lifting the short ban will further amplify it. But, the harder & faster the fall - the easier a CoCo sale will be.

 

This is very much a 'managed' restructuring, so expect at least a few more deep dips over the coming weeks. Most would then expect the successful result to be applied to the UK.

 

This is where you learn how to keep your head  ;)

 

SD