Arbitrage

In by Robert Duff-Silsby1 Comment

Replies
1
Voices
2
Robert Duff-Silsby

Not sure if you look at individual stocks, but I have CPH. It’s interesting because it’s going to be acquired by a Canadian company that’s offering equity at $5.50/share. Yet the current share price is at around $4.50.

This looks to me like a clear arbitrage opportunity, where you make nearly 25% return (assuming you sell the new stock issuance straight away).

My question is, why is it not trading at the price that is being offered by the new company? Is it just because it’s changing exchanges? Or are there hidden costs associated with selling the new stock once issued?

Thanks

  • Edit
    EquityMates

    Hey Robert,

    Thanks for the question - we answered it in Ask Us Anything - https://equitymates.com/podcast/aua-aug2/

    Cheers
    Bryce