Why did this take a 50 cent haircut today? That's a huge move for it. (It can't be someone who wanted to exit badly with a large position and was faced with a large spread between bid and ask -- because it stepped steadily down all day today, and the volume today was not much larger than normal.) Anybody?
Doesn't VMO use ARS (auction rate preferred securites) to periodically resest their interest rate on loans used for leverage? The ARS market is failing. Last week it pushed interest rates on NYC Port Authority notes to 80%. Banks seem to not want to partcpate in these auctions. Leading to uncertainty on the cost of debt for levered securities like VMO.
Following the onslaught the last 2 days, my guess is it has to do with the repricing of securities in anticipation of the bond insurers credit downgrade. I am surprised at the swiftness and severity of the price decline. Is this market efficiency, overreaction or manipulation? My hope obviously is the worst is over and some stabilization from here on.
I was wondering the same thing. Their sister fund VKI has similar drop. Can't think of any fundamental reason... may be unloading by institution. Hopefully it's a short term thing. This has happened before by the way.