The AIB thread


#1964

How much did we sow ?


#1965

Looks like we will get all of the €20b back and maybe even a profit :slight_smile:


#1966

I reckon we’ll still be hugely underwater (5bln maybe more). But shorting the stock into this float is an absolute no brainer; the current stupid price is a reflection of there being no free float; it will tank by about three quarters when the fresh float hits.


#1967

A reverse stock split is surely the first step pre float.

Not long left for existing long equity holders to dump their overvalued stock.


#1968

Is shorting still banned ?


#1969

I’ve been assuming the idiotic share price meant the ban on shorting bank stocks is water tight.

I’d guess that sale will happen, it will finally correct the share price, but how does anyone make money out of knowing that.


#1970

No

CBoI even issued a statement to this effect.

However shorting AIB is a high risk strategy (in the short run) as the market can still move upwards even if the fundamentals provide no support.


#1971

Think about that for a while !

:smiley:


#1972

The easiest and cheapest way was to short the stock (ADR) on the US exchange (AIBYY) – I had a post up here telling people to short it from 1.40 – but they delisted it a few weeks ago at 1.25. I made about 40% from $2.00 to its delisted price.

Shorting it here is harder and you need to talk to brokers to see the borrow and the cost. Just like shorting the ADR was, it’s as close to free money as the market presents.


#1973

I assume you are referring to Dublin property prices.

In a market that has insufficient property to meet it needs, a floor price is set at replacement cost (which includes land, development levies, professional fees, social and affordable housing contribution, VAT, finance costs and developers profit).

You have got to wonder why foreign developers are not flooding into Dublin if prices are significantly above current replacement costs.

After all developers love to make money :slight_smile:


#1974

not really
it’s not “fundamentals” it’s a technical phenomenon creating an arbitrage opportunity


#1975

I don’t think the Indo knows what “IPO” stands for.


#1976

Or because they know there’s significant shadow inventory that could sink prices.


#1977

I suspect any “due diligence” done by foreign developers will throw a long list of local “cultural factors” which they may feel are beyond their skillset.


#1978

Why risk your money on developing when you can buy completed developments cheaply off the books from banks or NAMA ?


#1979

Which of these cultural factors act as a disincentive to a developer?


#1980

I agree it is an arbitrage however if I had sold short at 8c I would have had a significant cash call


#1981

You will not get development funding for residential – the banks aren’t interested. They are massively encumbered and you can present the best business plan for making a 9% or 10% return on a resi development and they will kick you out the door, even with the recovery in resi property they are still overexposed should things turn back down - why magnify that exposure?
Funding for development will now only come from private “fully funded” sources i.e. not money created ex nihilo as a bank does. This is much less efficient than bank credit and also requires private sources that are not excessively encumbered nor already sufficiently exposed to property as an asset class. Good luck with that.


#1982

+1

It has to be attractive for investors to risk their money. As such the only show in town is Nama :frowning:


#1983

I’ve never shorted a share but the process seems to be

Broker borrows shares from someone like a pension fund who’ve a lot of shares and aren’t going to sell them all - the owners are paid interest
You sell the shares (if there’s a lot of shorting then it’s this selling that puts pressure on the sale price)
Later after the shares drop you buy back the shares and hand them back.
You pocket the price difference.

Since as mentioned by Luan shorting is allowed for AIB my guess is whatever little market AIB is on mustn’t be able to organize this and there’s no organized investor to borrow shares off.

As they sound more technical I assume buying put options is less likely to be available on this market.

I’ve wondered if AIB are issuing shares to employees at the moment and if they are at what price they use to account for them, it wouldn’t be entirely surprising if insiders have found a way to quietly profit from the misprice.