Citi Common-Preferred Arbitrage Above. The higher the CIX, the more vaseline portfolio managers will need to purchase from Duane Reade today. Sphere: Related Content
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Monday, April 13, 2009
Dead Citi's Ghost Slaying Hedge Funders Left and Right
Curious which hedge funds got the margin calls of death today.
Citi Common-Preferred Arbitrage Above. The higher the CIX, the more vaseline portfolio managers will need to purchase from Duane Reade today. Sphere: Related Content
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Citi Common-Preferred Arbitrage Above. The higher the CIX, the more vaseline portfolio managers will need to purchase from Duane Reade today. Sphere: Related Content
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6 comments:
or is it as simple as banks running pre GS 1Q announcement..
many banks have the same price action.. today, last week, ytd...
I think the chances that C will allow an exchange with Pfd holders getting more that their $25 par, is zero. If the common stays up, the exchange ratio will be adjusted. Arbs could still be hurt, but not as much as your chart would imply (as long as arbs can hang in there).
I tried all day to locate stock to sell short;I could not find any at any loan rate.This is a huge short squeeze that is going to end badly for the longs.I would suggest that if Citi changes the exchange rate after stating it twice,once in a SEC filing ,they are going to be subject to the biggest lawsuit in the history of the financial markets.
When the deal was announced I bought the preferred and sold June 2.5 and June 4 covered calls against the common, based on the announced conversion rate.
The calls capped my upside at 100% - which I thought OK for 2 months work - but lowered my basis to $1.25 and $1.85 on the common. Which should protect me against any reasonable reduction in the conversion ratio.
It seemed like shooting fish in a barrel, with much less risk than shorting the common. Am I missing something?
that's Great Sandy's Ghost to you, flyboy.
and I ain't dead yet.
In the prospectus it was clearly stated that the number of shares to be exchanged was fixed and would not be changed even with fluctuations in the stock price.This is nothing more than a gigantic short squeeze.What happens with a short squeeze.The stock rises until the shorts are bought in.After that the stock collapses.I do not know at what price the shorts are going to bebought in.What I do know once it is over there will be a long squeeze with the stock
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