The AIB thread


#1984

I think you both need to look up the definition of arbitrage.


#1985

haha, yes strict definition ONLY applies on the 'Pin, mmmmmkay


#1986

That and maybe infiltrating some of the tightly knit networks of influence around property development.


#1987

You may also need to look up the loose definition of the word.

Shorting an insanely expensive stock is most definitely not a pseudo arb.


#1988

I thought it was illegal to short bank stocks in Ireland?


#1989

No it is legal now


#1990

Happy days! I got an invite to a Davy investment seminar, I’ll be sure to stand up and ask them loudly how to do it.


#1991

it is, as the ADR was in June at $1.40 - it was delisting in September so had to drop to the 1.20s between then and Sep, it had to;

today the Irish stock is basically not pricing and when they float the government shares it will price – at somewhere between 50% and 75% lower than it is now


#1992

Shorting is not arbitrage.


#1993

Doesn’t it count as arbitrage if you know that the stock has to drop to a certain value by a certain date?


#1994

then it’s called “a sure thing” . Arbitrage is Riskless. this ain’t riskless.

its a bit like the tendency some people have to call something a *bubble * when *expensive * will do :stuck_out_tongue:


#1995

Is “a sure thing” not the same as “riskless”? So shorting in the situation I described is in fact arbitrage.


#1996

No - I was being tongue in cheek.
No.


#1997

haha, jesus
the stock is effectively now not trading as a share of AIB, when it does begin to trade as a share of AIB it must be at a 50% to 75% discount from here
it will begin to trade as a share of AIB when the state floats their percentage
it has nothing to do with “believes”


#1998

No one disagrees its overpriced.

There’s a possibility of a retail punter reading this thread, getting short and getting stopped out. That’s all.


#1999

It’s not a sure thing. There are plenty of perfect arbs out there that never contract and cost those who bet on them money in borrow costs etc. This is even less of an arb given there’s no long element to the trade at all. I don’t know what the borrow cost on this is but it’s quite conceivable that it could be very high and eat into any potential returns while you’re waiting for it to go lower.


#2000

A sure thing is not the same as riskless? OK then.


#2001

:unamused:

when I described it as being “a sure thing” I was being tongue in cheek.

It’s arguably a “good bet”. Don’t bet the farm on it, the market can remain irrational blah blah

Read what daveirl wrote - he does this for a living.


#2002

You seem to be misreading my comments and thinking that they refer to a specific event. Onlyone said “shorting isn’t arbitrage” and I was pointing out that shorting can, in fact, be arbitrage in the right circumstances. I have made no comment on whether shorting AIB is a sure thing and therefore arbitrage.


#2003

How sure a thing it is, and definitions of arbitrage are moot points if in practice no one can actually short the share.

Can investors short AIB or any other share on the ESM, the ISE isn’t as full featured as NASDAQ so how limited is the ESM?