Ballinvarosig Investors Posted May 31, 2011 Share Posted May 31, 2011 The spread between an ordinary London/Dublin-based share of Bank of Ireland and the NYSE-listed share has blown out to the extent that the NYSE share trades at a 100% premium to the equivalent London/Dublin share, despite both shares having exactly the same rights. See here for an idea of the difference - http://stockpar.com/index.php?id=7 What I am proposing is a simple arb, short the NYSE-listed share and go long the British/Irish share and wait for parity to be restored. Link to comment Share on other sites More sharing options...
rjstc Posted May 31, 2011 Share Posted May 31, 2011 The spread between an ordinary London/Dublin-based share of Bank of Ireland and the NYSE-listed share has blown out to the extent that the NYSE share trades at a 100% premium to the equivalent London/Dublin share, despite both shares having exactly the same rights. See here for an idea of the difference - http://stockpar.com/index.php?id=7 What I am proposing is a simple arb, short the NYSE-listed share and go long the British/Irish share and wait for parity to be restored. Very interesting. Thanks for the link also. I've never seen that one before. Have you done this one? Link to comment Share on other sites More sharing options...
nodnub Posted May 31, 2011 Share Posted May 31, 2011 http://uk.messages.finance.yahoo.com/Europe_Stocks/Ireland_Stocks/threadview?m=tm&bn=UKF-Stocks-BIR.IR&tid=37&mid=37&tof=2&frt=2 same situation as of last December? or are we missing something here? Link to comment Share on other sites More sharing options...
redwood Posted May 31, 2011 Share Posted May 31, 2011 How can I convert ordinary shares in Bank of Ireland into Bank of Ireland ADRs? If you wish to convert Dublin or London Stock Exchange-listed ordinary shares into ADR ordinary shares you should instruct your broker to contact the ADR Broker Desk at The Bank of New York Mellon. Depositary Contact Details can be found below. http://www.bankofireland.com/about-boi-group/investor-relations/agc-egc-dividends-and-adrs/adr-programme Link to comment Share on other sites More sharing options...
alwaysinvert Posted May 31, 2011 Share Posted May 31, 2011 Wow, there has got to be a catch? Link to comment Share on other sites More sharing options...
rijk Posted June 1, 2011 Share Posted June 1, 2011 how to buy the BIR shares, looks like Interactive Brokers and Ameritrade don't offer local Irish shares regardd rijk Link to comment Share on other sites More sharing options...
Ballinvarosig Investors Posted June 1, 2011 Author Share Posted June 1, 2011 How can I convert ordinary shares in Bank of Ireland into Bank of Ireland ADRs? If you wish to convert Dublin or London Stock Exchange-listed ordinary shares into ADR ordinary shares you should instruct your broker to contact the ADR Broker Desk at The Bank of New York Mellon. Depositary Contact Details can be found below. http://www.bankofireland.com/about-boi-group/investor-relations/agc-egc-dividends-and-adrs/adr-programme Costs of conversion are frustratingly high by going down this road, although it's a more sure fire way of locking a profit in. Link to comment Share on other sites More sharing options...
Ballinvarosig Investors Posted June 1, 2011 Author Share Posted June 1, 2011 Wow, there has got to be a catch? There shouldn't be. These two securities are the exact same thing and it makes no sense that the spread between the two values should be so drastic. Link to comment Share on other sites More sharing options...
Ballinvarosig Investors Posted June 1, 2011 Author Share Posted June 1, 2011 how to buy the BIR shares, looks like Interactive Brokers and Ameritrade don't offer local Irish shares regardd rijk These are listed on the London stock exchange. CUSIP - 46267Q939 SEDOL - 3060625 Link to comment Share on other sites More sharing options...
rijk Posted June 1, 2011 Share Posted June 1, 2011 thanks for sharing this idea ballinvarosig, IB does offer BIR this looks like a decent opportunity, looking at historical data, the gap closes like clockwork, can't think of major downside/risk sofar other than the gap temporarily widening, but am probably missing something....... regards rijk Link to comment Share on other sites More sharing options...
rijk Posted June 1, 2011 Share Posted June 1, 2011 How can I convert ordinary shares in Bank of Ireland into Bank of Ireland ADRs? If you wish to convert Dublin or London Stock Exchange-listed ordinary shares into ADR ordinary shares you should instruct your broker to contact the ADR Broker Desk at The Bank of New York Mellon. Depositary Contact Details can be found below. http://www.bankofireland.com/about-boi-group/investor-relations/agc-egc-dividends-and-adrs/adr-programme Costs of conversion are frustratingly high by going down this road, although it's a more sure fire way of locking a profit in. looked on The Bank of New York Mellon's website but couldn't find any cost/fee information, is it a flat amount per share or a %? regards rijk Link to comment Share on other sites More sharing options...
Ballinvarosig Investors Posted June 1, 2011 Author Share Posted June 1, 2011 How can I convert ordinary shares in Bank of Ireland into Bank of Ireland ADRs? If you wish to convert Dublin or London Stock Exchange-listed ordinary shares into ADR ordinary shares you should instruct your broker to contact the ADR Broker Desk at The Bank of New York Mellon. Depositary Contact Details can be found below. http://www.bankofireland.com/about-boi-group/investor-relations/agc-egc-dividends-and-adrs/adr-programme Costs of conversion are frustratingly high by going down this road, although it's a more sure fire way of locking a profit in. looked on The Bank of New York Mellon's website but couldn't find any cost/fee information, is it a flat amount per share or a %? regards rijk $0.02 a share. Although a big institutional client would no doubt be able to wrangle a better deal. Link to comment Share on other sites More sharing options...
oddballstocks Posted June 1, 2011 Share Posted June 1, 2011 Just called Fidelity and they quoted me at $.05/share USD to convert. I was told they do this often but for a particular issue it depends on if the paperwork exists to do it, if not it will take a few days to get the conversion paperwork in order otherwise it can be done right away. So as it stands I'm waiting to see if Fidelity can work this out and then I'll jump on it. Converting gives me an instant profit, I'm debating shorting IRE, long BKIR but I'd rather have a smaller instant profit than a longer bigger profit. Honestly my biggest worry is the guys at Fidelity steal this trade for themselves, the broker on the phone couldn't believe it. At first he acted like this must be a misunderstanding with the share ratio, then he worked the numbers over a few times and started to get excited about it. Link to comment Share on other sites More sharing options...
keerthiprasad Posted June 1, 2011 Share Posted June 1, 2011 has anyone else spoken to bny mellon, i just called the listed number and was told that they cannot convert anymore bank of ireland shares due to an SEC limit being reached. Any ideas? Link to comment Share on other sites More sharing options...
oddballstocks Posted June 1, 2011 Share Posted June 1, 2011 I posted a simple spreadsheet I worked up to visualize this. Using what I was quoted with at Fidelity for a $10k trade the profit is $5500 or about 52%. You can adjust the currency cost, commissions, conversion cost etc. Link to comment Share on other sites More sharing options...
Ballinvarosig Investors Posted June 1, 2011 Author Share Posted June 1, 2011 I posted a simple spreadsheet I worked up to visualize this. Using what I was quoted with at Fidelity for a $10k trade the profit is $5500 or about 52%. You can adjust the currency cost, commissions, conversion cost etc. The London listed security is priced in Euro, but other than that, you're correct. I am guessing it's all moot anyway as BNY Mellon won't allow Fidelity to perform the conversion of shares. Link to comment Share on other sites More sharing options...
rijk Posted June 1, 2011 Share Posted June 1, 2011 I posted a simple spreadsheet I worked up to visualize this. Using what I was quoted with at Fidelity for a $10k trade the profit is $5500 or about 52%. You can adjust the currency cost, commissions, conversion cost etc. is the 0.143 in GBP or Euro? Link to comment Share on other sites More sharing options...
value-is-what-you-get Posted June 1, 2011 Share Posted June 1, 2011 has anyone else spoken to bny mellon, i just called the listed number and was told that they cannot convert anymore bank of ireland shares due to an SEC limit being reached. Any ideas? I thought that once this idea gets around even just shorting IRE would work fine however my broker just informed me there are no more shares available for shorting today - try again tomorrow! Damn details! Link to comment Share on other sites More sharing options...
oddballstocks Posted June 1, 2011 Share Posted June 1, 2011 There are options on IRE, the $2 Puts June or July seem reasonable, just depends on how long this takes to revert. Link to comment Share on other sites More sharing options...
Ballinvarosig Investors Posted June 1, 2011 Author Share Posted June 1, 2011 has anyone else spoken to bny mellon, i just called the listed number and was told that they cannot convert anymore bank of ireland shares due to an SEC limit being reached. Any ideas? I thought that once this idea gets around even just shorting IRE would work fine however my broker just informed me there are no more shares available for shorting today - try again tomorrow! Damn details! I think that this tactic will also work. Bank of Ireland have a €700 million market cap, but are being made raise €5.2 billion of capital, there is huge dilution to come. I think that the NYSE is more likely to be overvalued, as opposed to the London/Dublin security being undervalued. Link to comment Share on other sites More sharing options...
rijk Posted June 1, 2011 Share Posted June 1, 2011 please find attached historic trend graphs of IRE BKIR spread, this was a quick task, so hope there are no errors... the longer term graphs look like arb paradise, the spread closes within months like clockwork... i am slightly concerned regarding the fact that, since december 2010, the spread hasn't reversed, while in the past any spread always reversed to parity within a maximum of 2 months..... this probably reflects the extreme stress this company is under currently... in any case, even in a bankrupty scenario, the spread should reverse and 50% profit should appear.... would be interested to hear different opinions regarding the reasons for the spread not closing since december 2010 and potential risks regards rijk Link to comment Share on other sites More sharing options...
alertmeipp Posted June 1, 2011 Share Posted June 1, 2011 Anyone can actually execute the strategy, the long side is easy, the short side is hard to implement. Link to comment Share on other sites More sharing options...
twacowfca Posted June 2, 2011 Share Posted June 2, 2011 Anyone can actually execute the strategy, the long side is easy, the short side is hard to implement. The problem is usually the availability of shares for shorting or the price one will have to pay to borrow the shares to short or the possibility that shares once borrowed may be withdrawn. Naked shorting anyone? Just kidding FFH fans. :D All in all, looks worth persuing. Link to comment Share on other sites More sharing options...
twacowfca Posted June 2, 2011 Share Posted June 2, 2011 please find attached historic trend graphs of IRE BKIR spread, this was a quick task, so hope there are no errors... the longer term graphs look like arb paradise, the spread closes within months like clockwork... i am slightly concerned regarding the fact that, since december 2010, the spread hasn't reversed, while in the past any spread always reversed to parity within a maximum of 2 months..... this probably reflects the extreme stress this company is under currently... in any case, even in a bankrupty scenario, the spread should reverse and 50% profit should appear.... would be interested to hear different opinions regarding the reasons for the spread not closing since december 2010 and potential risks regards rijk Probably maxed out on the borrow or exorbitant charge to borrow. Link to comment Share on other sites More sharing options...
rijk Posted June 2, 2011 Share Posted June 2, 2011 "or the possibility that shares once borrowed may be withdrawn" under which scenario would this happen and how likely is this to happen? regards rijk Link to comment Share on other sites More sharing options...
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