Yeah, I'm quite surprised myself. Due to the climbs in the LSE price and the ongoing gains the GBP is making vs the dollar, the ADRs are currently priced at a 25% discount to the LSE price. The Ask is $3.00 and I get the feeling one can get as much as one wants at that price. Friday's UK closing price puts the "real" value of the ADRs at $3.98.
I'm trying to get the whole mechanism and costs figured out. I think my LSE/ADR conversion was done at a cost of 1 cent per ADR.
It's still puzzling that there's no trading despite this seemingly easy profit because of the ADRs being so underpriced. It may be because the conversion process from ADR to LSE shares is a mystery to most. If I don't know, how likely is it others have a better grasp of it?
I think it requires the brokerage directly contacting Bank of New York to do the conversion, and it needs to be a broker that can deal with foreign shares, which I doubt most can. AG Edwards/Wachovia/Wells Fargo can, but they're not a cheap date and they're trying to get the mechanism and cost figured out for me.
If it were as easily done as said, buying ADRs, converting them to LSE shares, and selling them there would be like a 33% profit printing press less commissions and conversion fees.
I also need to ask my brokerage who has the conversion burden and what time requirements there are on them if I want to buy more ADRs and have the new ones delivered to me as certs. I would think the marketmaker who filled the order, but not sure.
As far as I know, I'm still the only person who has any ADRs and mine aren't for sale, especially at the quoted prices.
There have been some big block buys in the UK recently, but I wouldn't think that would be how someone who is interested would enter the ADR business, unless they're getting inventory to try to sell later at a profit here. I'd think buying the ADRs and putting the loss burden from conversion on someone else would be more desirable.
Currently only NITE seems to be quoting it and part of me wonders just how under the radar this company is to them and if one did it in small enough blocks, just how many shares someone could get while pinning a pending 33% loss on NITE before they'd realize they should've been paying attention.
I'm sure the first time someone accumulated, say, 10k shares (1 million UK shares) slowly enough to not wake them up, for a cost of ~$30k, then asked for certs and NITE had to pay about $40k to get them, that'd get their attention.
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