Global Value Investing

[ratobranco]

PBN/PBG - I saw this and thought very deeply about going long/short PBG/PBN. I decided against it based on the 10% dividend + interest I would have to pay. The market can maintain an irrational disparity between these two stocks for a very long period of time, and there is no guarantee that the 10% yield that goes into PBG's balance sheet will get reflected in the disparity. It obviously hasn't been reflected so far, if you look back a year or so.

I am also concerned about getting squeezed in PBN, given the excessive short interest.

To be honest, I thought the earnings report sucked. They missed the already-lowered production estimates from analysts (Credit Suisse, their ally, lowered the estimate to 38,000 and they missed even that number). This is the 3rd straight miss in a row. I think the market is starting to doubt the quality of their reserves.