par value and shorting

Discussion in 'Stocks' started by Yuguru, Jun 24, 2008.

  1. Yuguru


    Some of these bank stocks have high par values, like

    WB 3.33$ share.

    How would this play if the stock were to trade under this figure. I thought par values were pretty absolute as far as valuing a piece of paper (stock)

    Does any one have a source of finding out par values and whats happens in a BK or other?

  2. Par value is meaningless for common stock.
  3. Yuguru


    I know under 99% of trading par value is meaningless, but that is ususally because the par value is ZERO or .01cent. In this case i think $3.33 is substantial, since it represents %20 of current value.

    what if the stock was at $2.00 and you had to deliver $3.33 par stock, cant think of situation this could actually occur, but a thought.
  4. where did you find that par value for wb?
  5. Daal


    I wonder why they issued stock with such high par values in the first place
  6. Yuguru


  7. This is not common stock.

    7.85% Trust Preferred Securities

    But, yes here is the original par value, weird.

    Common stock, $3.33 1/3 par value, 3 billion shares authorized, 1.901 billion shares outstanding

  8. Yuguru



    yes thanks for clarity, I discovered WB common par value (3.33)while researching the Pref shares.

    Here is a real shocker... NCC common stock Par Value is $4.00

    It has been so long since Par values were even researched or 'IN play" I can't get my head around if this even matters, say in a liquidation? would this value be returned to shareholders, would they have a larger claim in bankruptcy? would this par value help support bond values, NCC debt is selling at discount.

    Cosair just bought shares at $5, newly minted, this could change par value by a large amount. or not, but if NCC reserves $4.00 share, that is balance sheet money that can't be leveraged? correct?, Not without changing PAR VALUE, which I don't think they can do.

    Here is Situtation.. XYZ bank , par value .01(penny) very normal. buys NCC in stock swap, I get to use that balance sheet difference as Tier 1 capital!!! sounds like bargin for a buyout even with problems.

  9. Don't waste your time with this anymore.

    The 'par value' as stated merely affects how shareholder equity accounts are balanced.

    Par value + Paid in capital is the amount of cash received by the company in exchange for shares sold to investors

    It has nothing to do with valuation.

    Don't trade stocks with par value in mind.

    Book value is more meaningful, assuming you can pin down the correct book value.
    #10     Jun 24, 2008