Thoughts on SKF and NAV discount

Discussion in 'Stocks' started by $CostAverageMAN, Sep 29, 2008.


    Assuming a NAV on SKF at the close of Friday at 97.00....and the XLF down about 7.0%...This should give SKF a NAV of roughly 110.50, yet it currently trades at 105.50.....Now I understand the deviation with them not being able to issue new shares...Hence creating a discount/premium aspect to NAV with this particular product.....

    But assuming the OCT. 2nd short sale restrictions gets lifted on financial stocks.....Does anyone see an ARB here or just too risky to play with?

    Currently long from Fridays close, but considering getting out with a nice gain....Although the thought of another 5% ARB for waiting a couple days has peaked my interest.....

    Just checking for opinions

  2. closing some of it north of 107....This vote should be interesting...Many stocks near the lows of the day going into this vote...HMMMM

  3. I can't believe it......I was right when I really wanted to be wrong

    One thing I have always known is that you can't count on our government to get anything right.....

    And for that reason alone I held the majority of my SKF position through this vote....Out at 115+....and very liquid...

    These people that run this congress are a JOKE......buying assets that yield at fire sale prices.... Let the public bidding begin....I will take some ABX-HE-PENAAA 07-2 @ 20.10

    I posted my bid!!!!

    GL trading out there today......

  4. Bootsie



    Are the NAV's of SKF and XLF always co-related?

    I would imagine they are very close... but as you say, with the restrictions on short selling, I imagine the arb is yet to come....


  5. mskl


    I don't know too much about these products - however I would think that since these are Ultra Short Shares that they must have some leverage associated with them thus the actualy short holding may be swaps or OTC contracts which means there could be some counter-party risk (LOL)

    Imagine a large financial institution going under and the indexes crap out (IYF/XLF) but the other side of the swap is the same Institution that went under.......

    I would check the actual holdings of the ETF - if they have OTC type products or swaps then be careful. The ETF would be safer if the fund was short the actual shares.