I don't think the book value on this bank means very much when it comes to valuation. At the time of the banking crisis beginning in 2007, Bank of Ireland owned a load of assets and businesses. Over time they sold off many of those assets to stay afloat. Every time an asset was sold the book value fell. That said, speculators in this bank are ignoring the fundamentals and book value so it is impossible to arrive at a valuation, Bank of Ireland trades purely on emotion.
Trading at a significant premium today, should be at 29 cents. It traded the same way last Friday and collapsed Monday to the correct fair value. It is my hope IRLBF begins to trade in line with BIR.IR after IRE goes away on significant volume, very anemic now. I traded IRE for a very long time with great success both long and short. My hope is this one can be a viable trading replacement for me.
Look at a 12 month chart and you will see IRE rolled over at the end of February 2014, punctuated by a few trading rallies, but clearly has been in a downtrend since the rollover point..
It appears to me if you are in the US you are better off with IRLBF as it looks to be trading on the OTC market and priced in US Dollars. BKIR is priced in Euro and does not trade in the US but only in Europe. Trading the OTC vs. Europe is far less expensive. BKIR and IRLBF are the same stock just priced in different currency and trade in different markets.
That is my read on the difference, I could be wrong but I don't think so. If anyone has more to add please post away!
For any foreign publicly traded company to have an ADR it cost that company money in administrative fees, which could be significant! The ADR for Bank of Ireland represents a small proportion of the total shares trading in the bank.
The clear message from the bank is that tiny group is not worth the expense of having the ADR!
Here's a portion of the official news release from Bank of Ireland.
"Trading in Ireland and the United Kingdom accounted for the majority of the trading in the Group’s
shares in 2014. In contrast, ADRs account for less than 5% of the ordinary stock in issue and c. 7.5%
of worldwide trading in Bank of Ireland’s shares and ADRs over the preceding 12 months.
Accordingly, the Group has concluded that the benefits of reduced administrative complexity exceed
those of continuing the programme."
Obviously check with your tax professional but in my opinion you will not pay tax on the conversion. The ADR is simply a way for US investors to buy the common shares of Bank of Ireland so when you convert you get what you have what you always held.
BIR.IR is under the 50 day line since breaking to the downside on January 5. The 200 day line is at .29 Euro and held on Friday. If the 200 day line is violated I would agree there is more downside to come. As I have posted here since May of 2014 the greater risk for US investors is the falling Euro/Dollar.
If you don't want to do the math, or don't know how, you can get real time conversion at this site.
Best to you but you really need to do some reading on the exchange risk. Many people have posted here that all will be fine when the stimulus is a fact. The fact is the stimulus will kill the Euro and lower the value of Euro priced securities for investors using the US Dollar.
Here's a blurb from this afternoon.
NEW YORK, Jan 22 (Reuters) - The euro sank to a more than 11-year low against the dollar and a three-month low against the yen on Thursday after the European Central Bank launched a landmark bond-buying program that will pump hundreds of billions into a sagging euro zone economy.
Take a look at the daily Euro/Dollar chart for today and see what happened when the news came out.
twoodard you forgot to make the exchange rate translation.
40,000 BKIR times .30 Euro does equal 12,000 but not in US Dollars. To convert to US dollars using today's conversion multiply 12,000 by 1.138 which equals $13,656 in US dollars. The reduction is the premium that generally is there and will be lost if you convert.
For months the Euro/Dollar has been falling and that is a problem for US investors in any Euro based investment. It was not all that long ago the Euro/Dollar was at 1.39! Using that matrix with BKIR at .30 Euro X 40,000 X 1.39 equals $16,680 US Dollars. So even if BKIR stays at .30 Euro when the Euro/Dollar is declining in terms of US money you will see your value fall with the exchange rate.
I suspect each ADR will convert to 40 shares of BIR.IR and the immediate cost to holders converting will be the amount of the premium over the underlying.
Not sure how far oil will climb. Futures traders seem to think no higher than $65 and that is two years out. Crude could base for 6 months and go nowhere. What royalty trusts have you found and what is their current distribution. The large majority of my holdings are income related. My aggressive trading is mostly for the sport of it now!
As for IRE, my reluctance at this juncture is the falling Euro. Forex opinions from people far smarter than I see the Euro/Dollar going to parity. I'm in the US so going to parity would negate any upward move in BIR.IR for me as a long term holder. The popular opinion is Bank of Ireland is trading currently at fair value and the growth in that part of the world could go backwards again.
The equity markets hate uncertainty. In early September 2014 I posted a reply to one of the more intelligent posters here where that poster expressed concern that the market had become exhausted. My reply to his post was as follows....
"Agreed, keep an eye on crude oil as an early indicator. In the summer of 2008 crude began the fall in price, preceding the drop in the general market and the second leg down for IRE by a couple months. Of greater importance the bottom in crude occurred in February 2009 preceding the rise in IRE and the general market by almost a month. I have watched crude all of my trading career, going on 35 years, as an early indication of the direction of the equity market. Crude began to sell off in June 2014 and broke the 200 day line in late July and has no support at this point."
Many of my critics with comprehension flaws interpreted that to suggest the market and IRE were going to crash the next day, not true. Key words that seems to have slipped through their thought processing was "Early Indicator" "preceding" and "Couple Months" but in reality what falling crude prices creates is uncertainty. Uncertainty of the earning power of the energy sector which flows over into manufacturing which flows over into retain and on and on.
Bottom line is the market hates uncertainty and will be volatile until this situation works its way through, which it always does.