Possible arbitrage on OSTK | OSTK Message Board Posts

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Msg  44057 of 44264  at  1/9/2018 1:53:02 PM  by


Possible arbitrage on OSTK

Overstock has some preferred shares trading under ticker OSTBP. These were offered about a year back to current shareholders at about 10% discount, for sweetener. It was part of Overstock's push to issue shares on the blockchain. Since those blockchain shares required creating a new brokerage account (and some other restrictions) this was the lawyers' way of making something equivalent available to everyone.

They have identical rights as OSTK except that these also get a 1% dividend. So theoretically they should trade at a slight premium. In practice, because they have a small float (500K, I think) and are very thinly traded -- they have retained that discount. Occasionally the difference gets smaller -- they were equal in early December -- but usually right around 10-15%.

Except now. Currently they are at 62-63 which gives OSTK a 40% premium. I would expect this difference to narrow in the future. And if there is a sale of the company, they will be worth exactly the same as OSTK.

I have recently rotated some of my shares out of OSTK into these. It means I now have to pay hefty long-term gains on the lots I sold and I was giving up the liquidity of common. However, the discount seemed too great to ignore.

Any thoughts?

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Msg # Subject Author Recs Date Posted
44059 Re: Possible arbitrage on OSTK Rollgard1 0 1/12/2018 6:59:21 AM
44123 Re: Possible arbitrage on OSTK.... simply amazing the common and preferred went EVEN this morning berkstock3 0 3/14/2018 10:36:08 AM

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