CLOSING DEUTSCHE TELEKOM
Closing our scrip divi opportunity BUY trading call: -3.99% ABS, +1.45% REL.
BUY DEUTSCHE TELEKOM
SCRIP DIVIDEND ARB CREATES OPPORTUNITY
Thursday • 09 June 2016 • 10:25
DTE went ex a €0.55 div that shareholders can take in cash or shares. Over the record date short interest has increased by 500m shares which will be utilised for scrip arbitrage.
The reference price for the scrip will be set using the VWAP today. Using the subscription ratio we estimate roughly 28 entitlements to 1 new share, so 17.85m shares that need to be hedged (some will have been done already, let me know if you want the calculation).
Since the ref price is the VWAP today it pays for those executing the arb to get the stock down. The 18m shares are doing some damage today, The stock is down 3% currently. For those of you happy to make a couple of percent, this is a good trading call.
BUY DTE here or OTD.