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Deutsche Bank AG Message Board

  • mateintwo mateintwo Feb 25, 2009 11:11 AM Flag

    Valuation pfds question

    If we compare 3 European financial pfds with about the same coupon (7,25- 7,5%)
    AEG’s AEF closed at $7,90 compared to $4 for the common shares.

    ING’s IDG closed at 7,08 and ING closed at $4.86

    Finally DB’s DCE closed at 8.35 and DB closed at 25.22

    We can argue all bank pfds are priced at insanely low prices but what stands out here is that
    IDG and AVF trade at premium to the common shares while DCE is valued at only a fraction of the preferred share.

    If the market fears nationalization why would investors be willing to buy common DB shares at such a premium? Or maybe the answer is that DB pfds deserve to trade much closer to $20 considering the par value is $25?

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    • I am wrestling with the idea of doubling down on DCE, having bought new at $25. It is , of course, non-cumulative, so it would not be good if they suspend, but this seems unlikely.
      Unlikely, but I assume the current price refelects a widely held view that suspension has, in fact, a substantial probability.
      Having said that, 'widely held views' have not done so well lately..

      I already doubled down in IGK (from ING) at 7.00$ (having bought new) as a punt on no deferrement.

    • It will be interesting right before DCE goes ex-dividend on March 11 next Wed. Deutsche Bank is a well managed bank especially compared to the rest. The WSJ said yesterday:
      Deutsche Bank is in a somewhat enviable position. Not only has it held up better than rivals as markets and economies around the world buckle, but it is benefiting from its conservative hiring policy in the good times. Investment-banking head count has held steady since 2003, according to bank officials.

    • Man! Look at your DB to DCE comparisons today! DB = - 3% and DCE -22%.... I really don't understand this...As previously posted, I tend to track DTK v. DKT and that too is not understandable.... As DTK, DKT and DCE are all identical securities except for different coupons as fae as I can tell, how can there be a better than 300 basis point current yield spread consistently between them? That's the way it's been for the past two weeks or more and it just doesn't make any sense.... not that any of this makes any sense whatsoever....At these levels, one must assume that the preferred dividends are toast for at least the next quarter.... no news, but what else could justify a 25% current yield??

      • 1 Reply to foreverwhiteroses
      • I am starting to think there is massive manipulation going on with bank pfds by the short sellers of the common stock. It does not take muck volume to knock down the preferred shares (especially since the uptick rule is not in effect).

        And of course the short sellers of the commons want to destroy trust in the banks and they can do this on the cheap knocking down the pfds and even if they lose some money at the end this is peanuts compared to the profits shorting the commons.

        Also remember any company paying divs (even a penny) on the common share must pay the preferred share dividends.

    • mateintwo AVF is AIG's prefd. correction please?

    • Very interesting comparative perspective! r u sure DCE?? is DB 's prefd? DTK is very low too.

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