ING calls are a cheap way to pay this one - the June $13s eg are trading at 10 cents. I've been buying both the June and July $13 calls at these levels over the last couple of days. Assuming the common gets back up over $13 in short order, the calls could easily trade over $1 or greater than a 10 fold return vs a 17% return by buying the common at today's closing price.
Governments under financial strong stress make crazy things, and find a crazy reasoning to explain it.
For example, last week the Hungarian government bought 21% of its national oil company called MOL, and told they want "stong energy for Hungary", and spent a couple billion USD loaned from IMF on this transaction, while keep up the austerity measures.
The Greek Gov. is no better. Dont trust they will not make crazy things, like nationalise NBG. They were already caught lying, they loaned and spent exorbitant amount of money on unsustainable social services, and bankrupted their grandchildren in the process.
However, the mood to spend recklessly has changed, now people, banks and governments all become savers, and some reason looks to trickle back to finances. And the greek gov. is under EU control: they get money to roll over the loans as long as they comply and try to do reasonable things.
If they tirn communist and nationalize banks, they are off the Taigetos cliff for 2 generation. SO, I think it is impossible the German public opinion would accept to help to finance greeks, while they become communist, nationalize banks, deny paying debts, etc.
Yes, we are in hard times. I used to read Graham's books to get some perspective.
Dont forget the Sberbank story. In aug. 1998, 13 years ago, Russia defaulted, their biggest bank, Sberbank was by all measures bankrupt, and Sberbank was valued on the stock exchange $4000 per branch. Today they are selling 40 times that amount, still undervalued. In 13 years NGB will be valued 40 times today's price.
Correct speculation. Your risk is the slow improvement in USD/EUR rate, moving from 1.42 towards 1.32, plus the liquidity hole created by FED closedown of QE2, plus the worsening investor mood by the sliding of realestate prices.
The above headwinds could be easily compensated by the expected good 2Q2011 earnings, the clear upgrade cycle by the analysts, and a surprise news of a good offer for the Insurance business.
Anyways, a careful hint from management toward a possible onetime extraordinary dividend payment of $5 from the income of sold Insurance Business would skyrocket the ING price toward $18-20 in short order.
They should get at least $20-25B USD for the Insurance. And clearly, by their own repeated claim, they do not need this money for BASEL III banking requirement.
So they should compensate their shareholders for the panicky dilution of 1.7B shares 2 years ago. Any opinion?