European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

Bayerische Motoren Werke (BMW) / Event-Driven

<div>
<div>
<h3>Trends</h3>
</div>
</div>
<div>
<p>Discounts have generally tightened across the European space, in line with stock markets recovering.</p>
</div>
<div>
<div>
<h3>Recommended trades</h3>
</div>
</div>
<div>
<ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/entities/bayerische-motoren-werke-ag" target="_blank" rel="noopener"></a>
<p><a href="https://www.smartkarma.com/entities/bayerische-motoren-werke-ag" target="_blank" data-smartkarma-citation="entities:21591:1" rel="noopener">Bayerische Motoren Werke AG (BMW GR)</a> : the discount has traded sideways since mid-September, and is now 23.7%. I would recommend setting up a trade long BMW prefs, short common shares with a target of a 15% discount.</p>
</li>
<li>
<p><a href="https://www.smartkarma.com/entities/fuchs-petrolub-se" target="_blank" data-smartkarma-citation="entities:21624:1" rel="noopener">Fuchs Petrolub SE (FPE GR)</a> 's premium seems to vary within a range, which is probably liquidity related. It is 27% (vs. 34.4% in my October report). Remember that voting rights are valuable. Maintain the trade long ords/short prefs, with a 10% target.</p>
</li>
<li>
<p><a href="https://www.smartkarma.com/entities/henkel-ag-co-kgaa" target="_blank" data-smartkarma-citation="entities:21646:1" rel="noopener">Henkel AG &amp; Co KGaA (HEN3 GR)</a> shows a long-term trend towards a reduction of the premium of the preferred shares. The premium is 12.3% (down from 15.4% in my September report, and 13% in October). Maintain the trade long prefs/short common shares with a 10% premium target.</p>
</li>
<li>
<p>Voting rights are valuable in a company like <a href="https://www.smartkarma.com/entities/volkswagen-ag" target="_blank" data-smartkarma-citation="entities:21738:1" rel="noopener">Volkswagen (VOW GR)</a> , so a 4.9% discount of the prefs. seems about right (5.8% by mid-October).  It has moved sideways since mid-September. Preference shares have in the past traded at a premium due to its higher liquidity and inclusion in stock indexes. If you believe that this higher liquidity will mean that the discount will close, then a long prefs/ short common shares may be an option; plus it can be executed in size. The discount tightened since the March selloff and has been moving within a tight range.</p>
</li>
<li>
<p>A 36% discount of <a href="https://www.smartkarma.com/entities/danieli-c-officine-meccanich" target="_blank" data-smartkarma-citation="entities:21177:1" rel="noopener">Danieli &amp; C Officine Meccanich (DAN IM)</a> savers (vs. 37.5% in September and 39% in June) seems still too wide, and low liquidity does not help. I keep on recommending long savers/short ordinaries. A 30% discount is not a demanding target.</p>
</li>
<li>
<p><a href="https://www.smartkarma.com/entities/grifols-sa" target="_blank" data-smartkarma-citation="entities:21274:1" rel="noopener">Grifols SA (GRF SM)</a> B shares are trading at a 38.5% discount (vs. 41.9 by mid-September), there is a trend towards the tightening of this discount since mid-March. The discount in Grifols B shares has averaged 28% since listing of the B shares in February 2016. I recommend setting up the trade long B shares traded on Nasdaq, short A shares traded in Madrid. The target is a 27% discount. Please note there is FX risk, which can be hedged.</p>
</li>
<li>
<p>The current discount in <a href="https://www.smartkarma.com/entities/atlas-copco-ab" target="_blank" data-smartkarma-citation="entities:22282:1" rel="noopener">Atlas Copco AB (ATCOA SS)</a> B shares vs. A shares is 12.7% (vs. 13.2% by mid-October). I recommend setting up Long B shares/short A shares, with a target of &gt;10% discount.</p>
</li>
<li>
<p>Other than Industrivärden, the other major shareholder of <a href="https://www.smartkarma.com/entities/ssab-ab" target="_blank" data-smartkarma-citation="entities:22492:1" rel="noopener">SSAB AB (SSABA SS)</a> is Solidium Oy (State of Finland). The reversal on the discount over the last 15 months has no obvious explanation. The discount has widened recently to 8%. If anything, I would short B shares and go long A shares.</p>
</li>
<li>
<p>The discount is now 33.4% (vs. 32.7% by mid-October and 27% by mid-September), but it reached 42% on 19 May. I would set up long non-voting/short voting shares.</p>
</li>
</ul>
</div>
<div>
<p><em>Please read on for table and charts</em>.</p>
</div>



Trends



Discounts have generally tightened across the European space, in line with stock markets recovering.



Recommended trades






Bayerische Motoren Werke AG (BMW GR) : the discount has traded sideways since mid-September, and is now 23.7%. I would recommend setting up a trade long BMW prefs, short common shares with a target of a 15% discount.


Fuchs Petrolub SE (FPE GR) 's premium seems to vary within a range, which is probably liquidity related. It is 27% (vs. 34.4% in my October report). Remember that voting rights are valuable. Maintain the trade long ords/short prefs, with a 10% target.


Henkel AG &amp; Co KGaA (HEN3 GR) shows a long-term trend towards a reduction of the premium of the preferred shares. The premium is 12.3% (down from 15.4% in my September report, and 13% in October). Maintain the trade long prefs/short common shares with a 10% premium target.


Voting rights are valuable in a company like Volkswagen (VOW GR) , so a 4.9% discount of the prefs. seems about right (5.8% by mid-October).  It has moved sideways since mid-September. Preference shares have in the past traded at a premium due to its higher liquidity and inclusion in stock indexes. If you believe that this higher liquidity will mean that the discount will close, then a long prefs/ short common shares may be an option; plus it can be executed in size. The discount tightened since the March selloff and has been moving within a tight range.


A 36% discount of Danieli &amp; C Officine Meccanich (DAN IM) savers (vs. 37.5% in September and 39% in June) seems still too wide, and low liquidity does not help. I keep on recommending long savers/short ordinaries. A 30% discount is not a demanding target.


Grifols SA (GRF SM) B shares are trading at a 38.5% discount (vs. 41.9 by mid-September), there is a trend towards the tightening of this discount since mid-March. The discount in Grifols B shares has averaged 28% since listing of the B shares in February 2016. I recommend setting up the trade long B shares traded on Nasdaq, short A shares traded in Madrid. The target is a 27% discount. Please note there is FX risk, which can be hedged.


The current discount in Atlas Copco AB (ATCOA SS) B shares vs. A shares is 12.7% (vs. 13.2% by mid-October). I recommend setting up Long B shares/short A shares, with a target of &gt;10% discount.


Other than Industrivärden, the other major shareholder of SSAB AB (SSABA SS) is Solidium Oy (State of Finland). The reversal on the discount over the last 15 months has no obvious explanation. The discount has widened recently to 8%. If anything, I would short B shares and go long A shares.


The discount is now 33.4% (vs. 32.7% by mid-October and 27% by mid-September), but it reached 42% on 19 May. I would set up long non-voting/short voting shares.




Please read on for table and charts.


Liquid Universe of European Ordinary and Preferred Shares: November Report

<div>
<h3>Trends</h3>
</div>
<div>
<p>There has been no obvious trend over the last three months regarding the discounts, although it has widened in some names.  Trading opportunities are less obvious, but some still exist.</p>
</div>
<div>
<h3>Recommended trades</h3>
</div>
<div>
<ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/entities/bayerische-motoren-werke-ag" target="_blank" rel="noopener"></a>
<p><a href="https://www.smartkarma.com/entities/bayerische-motoren-werke-ag" target="_blank" data-smartkarma-citation="entities:21591:1" rel="noopener">Bayerische Motoren Werke AG (BMW GR)</a> : the discount has traded sideways since mid-September, and is now 23.2%. I would recommend setting up a trade long BMW prefs, short common shares with a target of a 15% discount.</p>
</li>
<li>
<p><a href="https://www.smartkarma.com/entities/fuchs-petrolub-se" target="_blank" data-smartkarma-citation="entities:21624:1" rel="noopener">Fuchs Petrolub SE (FPE GR)</a> 's premium of preferred shares is a whopping 34.4% currently. Remember that voting rights are valuable. Recommendation: long ords/short prefs, with a 10% target.</p>
</li>
<li>
<p><a href="https://www.smartkarma.com/entities/henkel-ag-co-kgaa" target="_blank" data-smartkarma-citation="entities:21646:1" rel="noopener">Henkel AG &amp; Co KGaA (HEN3 GR)</a> : the premium is 13.0% (down from 15.4% in my September report). I would set up a trade long prefs/short common shares with a 10% premium target.</p>
</li>
<li>
<p>Voting rights are valuable in a company like <a href="https://www.smartkarma.com/entities/volkswagen-ag" target="_blank" data-smartkarma-citation="entities:21738:1" rel="noopener">Volkswagen (VOW GR)</a> , so a 5.8% discount of the prefs. seems about right. It has moved sideways since mid-September.  If you believe that the higher liquidity of the prefs will, at some point, mean that the discount will close, then a long prefs/short ords may be an option; plus it can be executed in size. The discount tightened since the March selloff and has been moving within a tight range. </p>
</li>
<li>
<p>A 35.9% discount of <a href="https://www.smartkarma.com/entities/danieli-c-officine-meccanich" target="_blank" data-smartkarma-citation="entities:21177:1" rel="noopener">Danieli &amp; C Officine Meccanich (DAN IM)</a> savers (vs. 37.5% in September and 39% in June) seems still too wide, and low liquidity does not help. I keep on recommending long savers/short ordinaries. A 30% discount is not a demanding target.</p>
</li>
<li>
<p><a href="https://www.smartkarma.com/entities/grifols-sa" target="_blank" data-smartkarma-citation="entities:21274:1" rel="noopener">Grifols SA (GRF SM)</a> B shares are trading at a 37.9% discount (vs. 41.9 by mid-September), there is a trend towards the tightening of this discount since mid-March. The discount in Grifols B shares has averaged 28% since listing of the B shares in February 2016. I recommend setting up the trade long B shares traded on Nasdaq, short A shares traded in Madrid. The target is a 27% discount. Please note there is FX risk, which can be hedged.</p>
</li>
<li>
<p>The current discount in <a href="https://www.smartkarma.com/entities/atlas-copco-ab" target="_blank" data-smartkarma-citation="entities:22282:1" rel="noopener">Atlas Copco AB (ATCOA SS)</a> B shares vs. A shares is 13.2%. I recommend setting up Long B shares/short A shares, with a target of &gt;10% discount.</p>
</li>
<li>
<p>The discount in the <a href="https://www.smartkarma.com/entities/telefonaktiebolaget-lm-ericsso" target="_blank" data-smartkarma-citation="entities:22354:1" rel="noopener">Telefonaktiebolaget Lm Ericsso (ERICB SS)</a> (Ericsson) B shares has tightened since my July recommendation: from 8.7% to 6.8%. I would keep the trade on with a 3% discount target.</p>
</li>
<li>
<div>
<p>The discount in <a href="https://www.smartkarma.com/entities/schroders-plc" target="_blank" data-smartkarma-citation="entities:22134:1" rel="noopener">Schroders PLC (SDR LN)</a> is now 32.7% (vs. 27% by mid-September). I would set up long non-voting/short voting shares.</p>
</div>
</li>
</ul>
<p>Please read on for table and charts.</p>
</div>


Trends


There has been no obvious trend over the last three months regarding the discounts, although it has widened in some names.  Trading opportunities are less obvious, but some still exist.


Recommended trades





Bayerische Motoren Werke AG (BMW GR) : the discount has traded sideways since mid-September, and is now 23.2%. I would recommend setting up a trade long BMW prefs, short common shares with a target of a 15% discount.


Fuchs Petrolub SE (FPE GR) 's premium of preferred shares is a whopping 34.4% currently. Remember that voting rights are valuable. Recommendation: long ords/short prefs, with a 10% target.


Henkel AG &amp; Co KGaA (HEN3 GR) : the premium is 13.0% (down from 15.4% in my September report). I would set up a trade long prefs/short common shares with a 10% premium target.


Voting rights are valuable in a company like Volkswagen (VOW GR) , so a 5.8% discount of the prefs. seems about right. It has moved sideways since mid-September.  If you believe that the higher liquidity of the prefs will, at some point, mean that the discount will close, then a long prefs/short ords may be an option; plus it can be executed in size. The discount tightened since the March selloff and has been moving within a tight range. 


A 35.9% discount of Danieli &amp; C Officine Meccanich (DAN IM) savers (vs. 37.5% in September and 39% in June) seems still too wide, and low liquidity does not help. I keep on recommending long savers/short ordinaries. A 30% discount is not a demanding target.


Grifols SA (GRF SM) B shares are trading at a 37.9% discount (vs. 41.9 by mid-September), there is a trend towards the tightening of this discount since mid-March. The discount in Grifols B shares has averaged 28% since listing of the B shares in February 2016. I recommend setting up the trade long B shares traded on Nasdaq, short A shares traded in Madrid. The target is a 27% discount. Please note there is FX risk, which can be hedged.


The current discount in Atlas Copco AB (ATCOA SS) B shares vs. A shares is 13.2%. I recommend setting up Long B shares/short A shares, with a target of &gt;10% discount.


The discount in the Telefonaktiebolaget Lm Ericsso (ERICB SS) (Ericsson) B shares has tightened since my July recommendation: from 8.7% to 6.8%. I would keep the trade on with a 3% discount target.



The discount in Schroders PLC (SDR LN) is now 32.7% (vs. 27% by mid-September). I would set up long non-voting/short voting shares.



Please read on for table and charts.


Liquid Universe of European Ordinary and Preferred Shares: October Report

<h3><strong>Trends</strong></h3>
<p>There has been no obvious trend over the last two months regarding the discounts, although it has widened in some names. Some of the previous (May and June) recommendations have been bang on. Trading opportunities are less obvious, but some still exist.</p>
<h3><strong>Recommended trades</strong></h3>
<ul class="">
<li>
<a href="https://www.smartkarma.com/entities/carlsberg-a-s" target="_blank" rel="noopener">Carlsberg A/S (CARLB DC)</a>: close trade long B/short A shares (B are trading at 4.4% discount from 12% in June).</li>
<li>
<a href="https://www.smartkarma.com/entities/bayerische-motoren-werke-ag" target="_blank" rel="noopener">Bayerische Motoren Werke AG (BMW GR)</a> : the discount has widened to 23% from 18% by mid-August, as a result of recent volatility. I would recommend setting up a trade <strong>long BMW prefs, short ords</strong> with a target of a 15% discount.</li>
<li>
<a href="https://www.smartkarma.com/entities/fuchs-petrolub-se" target="_blank" rel="noopener">Fuchs Petrolub Se (FPE GR)</a> 's premium of preferred shares is a whopping 33.6% currently. Remember that <em>voting rights are valuable</em>. Recommendation: <strong>long ords/short prefs</strong>, with a 10% target.</li>
<li>
<a href="https://www.smartkarma.com/entities/henkel-ag-co-kgaa" target="_blank" rel="noopener">Henkel AG &amp; Co Kgaa (HEN3 GR)</a> The premium of the preferred shares is 15.4%. I would set up a trade <strong>long prefs/short common shares</strong> with a 10% discount target.</li>
<li>Voting rights are valuable in a company like <a href="https://www.smartkarma.com/entities/volkswagen-ag" target="_blank" data-smartkarma-citation="entities:21738:1" rel="noopener">Volkswagen (VOW GR)</a> , so a <strong>5.8% discount of the prefs</strong>. seems about right. If you believe that the higher liquidity of the prefs will, at some point, mean that the discount will close, then a long prefs/short ords may be an option; plus it can be executed in size. The discount tightened since the March selloff and has been moving within a tight range. </li>
<li>
<a href="https://www.smartkarma.com/entities/grifols-sa" target="_blank" rel="noopener">Grifols SA (GRF SM)</a> B shares are trading at a 41.9% discount (vs. 38% in June). The discount in Grifols B shares has averaged 28% since listing of the B shares in February 2016. I recommend setting up the trade <strong>long B shares traded on Nasdaq, short A shares traded in Madrid</strong>. The target is a 27% discount. Please note there is FX risk, which can be hedged.</li>
<li>The discount in the <a href="https://www.smartkarma.com/entities/telefonaktiebolaget-lm-ericsso" target="_blank" data-smartkarma-citation="entities:22354:1" rel="noopener">Telefonaktiebolaget Lm Ericsso (ERICB SS)</a> (Ericsson) B shares has tightened since my July recommendation: from 8.7% to 7.7%. I would keep the trade on with a 3% discount target.</li>
</ul>
<p>Please read on for table and charts.</p>

Trends
There has been no obvious trend over the last two months regarding the discounts, although it has widened in some names. Some of the previous (May and June) recommendations have been bang on. Trading opportunities are less obvious, but some still exist.
Recommended trades


Carlsberg A/S (CARLB DC): close trade long B/short A shares (B are trading at 4.4% discount from 12% in June).

Bayerische Motoren Werke AG (BMW GR) : the discount has widened to 23% from 18% by mid-August, as a result of recent volatility. I would recommend setting up a trade long BMW prefs, short ords with a target of a 15% discount.

Fuchs Petrolub Se (FPE GR) 's premium of preferred shares is a whopping 33.6% currently. Remember that voting rights are valuable. Recommendation: long ords/short prefs, with a 10% target.

Henkel AG &amp; Co Kgaa (HEN3 GR) The premium of the preferred shares is 15.4%. I would set up a trade long prefs/short common shares with a 10% discount target.
Voting rights are valuable in a company like Volkswagen (VOW GR) , so a 5.8% discount of the prefs. seems about right. If you believe that the higher liquidity of the prefs will, at some point, mean that the discount will close, then a long prefs/short ords may be an option; plus it can be executed in size. The discount tightened since the March selloff and has been moving within a tight range. 

Grifols SA (GRF SM) B shares are trading at a 41.9% discount (vs. 38% in June). The discount in Grifols B shares has averaged 28% since listing of the B shares in February 2016. I recommend setting up the trade long B shares traded on Nasdaq, short A shares traded in Madrid. The target is a 27% discount. Please note there is FX risk, which can be hedged.
The discount in the Telefonaktiebolaget Lm Ericsso (ERICB SS) (Ericsson) B shares has tightened since my July recommendation: from 8.7% to 7.7%. I would keep the trade on with a 3% discount target.

Please read on for table and charts.

Liquid Universe of European Ordinary and Preferred Shares: September Report

<h3><strong>Trends</strong></h3>
<p>The general trend of the last month has been a reduction of the premiums and tightening of the discounts. Some of the previous (May and June)recommendations have been bang on. Trading opportunities are less obvious, but some still exist.</p>
<h3><strong>Recommended trades</strong></h3>
<ul>
<li>
<a href="https://www.smartkarma.com/entities/bayerische-motoren-werke-ag" target="_blank" data-smartkarma-citation="entities:21591:1" rel="noopener">Bayerische Motoren Werke AG (BMW GR)</a> exhibited a trend towards a reduction of the discount of preferred shares. Now the discount is 24%, as a result of recent volatility. I would recommend setting up a trade<span class="apple-converted-space"> </span><strong>long BMW prefs, short ords</strong> with a target of a 12% discount.</li>
<li>
<a href="https://www.smartkarma.com/entities/fuchs-petrolub-se" target="_blank" rel="noopener">Fuchs Petrolub Se (FPE GR)</a> 's premium seems to vary within a range, which is probably liquidity related. It is 23.7% currently. Remember that voting rights are valuable. The recommendation is setting up <strong>long ords/short prefs</strong>, with a 10% target.</li>
<li>
<a href="https://www.smartkarma.com/entities/henkel-ag-co-kgaa" target="_blank" rel="noopener">Henkel AG &amp; Co Kgaa (HEN3 GR)</a> shows a long-term trend towards a reduction of the premium of the preferred shares. The premium is 12.9%. I would set up a trade long prefs/short common shares with a 10% discount target.</li>
<li>
<a href="https://www.smartkarma.com/entities/grifols-sa" target="_blank" rel="noopener">Grifols SA (GRF SM)</a>. Grifols B shares are trading at a 37% discount (vs. 38% in the last report), there is a trend towards the tightening of this discount since mid-March. The discount in Grifols B shares has averaged 26.7% over the last four years. I recommend setting up the trade<span class="apple-converted-space"> </span><strong>long B shares traded on Nasdaq, short A shares traded in Madrid</strong>. The target is a 27% discount. Please note there is FX risk, which can be hedged.</li>
<li>There is an 8.7% discount in Ericsson B shares (<a href="https://www.smartkarma.com/entities/telefonaktiebolaget-lm-ericsso" target="_blank" data-smartkarma-citation="entities:22354:1" rel="noopener">Telefonaktiebolaget Lm Ericsso (ERICB SS)</a> ). Setting up long B shares, short A shares seems tempting.</li>
</ul>
<p>Please read on for table and charts.</p>

Trends
The general trend of the last month has been a reduction of the premiums and tightening of the discounts. Some of the previous (May and June)recommendations have been bang on. Trading opportunities are less obvious, but some still exist.
Recommended trades


Bayerische Motoren Werke AG (BMW GR) exhibited a trend towards a reduction of the discount of preferred shares. Now the discount is 24%, as a result of recent volatility. I would recommend setting up a trade long BMW prefs, short ords with a target of a 12% discount.

Fuchs Petrolub Se (FPE GR) 's premium seems to vary within a range, which is probably liquidity related. It is 23.7% currently. Remember that voting rights are valuable. The recommendation is setting up long ords/short prefs, with a 10% target.

Henkel AG &amp; Co Kgaa (HEN3 GR) shows a long-term trend towards a reduction of the premium of the preferred shares. The premium is 12.9%. I would set up a trade long prefs/short common shares with a 10% discount target.

Grifols SA (GRF SM). Grifols B shares are trading at a 37% discount (vs. 38% in the last report), there is a trend towards the tightening of this discount since mid-March. The discount in Grifols B shares has averaged 26.7% over the last four years. I recommend setting up the trade long B shares traded on Nasdaq, short A shares traded in Madrid. The target is a 27% discount. Please note there is FX risk, which can be hedged.
There is an 8.7% discount in Ericsson B shares (Telefonaktiebolaget Lm Ericsso (ERICB SS) ). Setting up long B shares, short A shares seems tempting.

Please read on for table and charts.

Liquid Universe of European Ordinary and Preferred Shares

<p>This report contains a table that shows select European companies with non-voting shares and ordinary shares. Non-voting shares are usually referred to as preferred shares (although the denomination varies in the different countries), whilst voting shares are usually known as ordinary shares.</p>
<p>For each company there is a graph showing the discount (or the premium) of one share class relative to the other, followed by a relative value trade recommendation, if I believe there are grounds for it.</p>
<p>Please keep in mind that these are highly leveraged trades, and that spreads may temporarily blow up in a hypothetical, but possible, market shakeout.</p>
<p><strong>Recommended trades</strong>:</p>
<ul>
<li>
<strong>Carlsberg</strong> B shares are trading at a 12% discount vs. the A shares. A <strong>mean reversion trade </strong>could be set up, with a target of a <strong>5% discount </strong>of the B shares vs. the A shares.</li>
<li>BMW exhibited a trend towards a reduction of the discount of preferred shares. Now the discount is 22.4%, as a result of recent volatility. I would recommend setting up a trade <strong>long BMW prefs, short ords</strong> with a target of a 12% discount.</li>
<li>
<strong>Fuchs</strong>'s premium seems to vary within a range and is probably liquidity related. It is 20% at the moment. The recommendation is setting up <strong>long ords/short prefs</strong>, with a 10% target.</li>
<li>The erstwhile favourite share class trade, <strong>Volkswagen</strong>, shows no obvious trade opportunity at the moment, in my view. Remember that voting rights are valuable in a company like Volkswagen, so an 7.2% discount of the prefs. relative to the ords. seems about right (vs. 8.2% in the previous report). <em>But if you have a different (directional) view, believe that preferred shareholders are not going to get any rough treatment anytime soon, and look for size, you can set up the noughties' favourite trade, </em><strong><em>long VOW3/short VOW</em></strong><em>. </em>It is difficult to think of any takeover attempt for Volkswagen.</li>
<li>
<strong>Danieli</strong>: a 38.9% discount of the savers seems too wide. I recommend <strong>long savers/short ordinaries</strong>. A 30% discount is not a demanding target.</li>
<li>Telecom Italia savings shares are trading at a 4.3% premium to ordinary shares (vs a premium by mid-May of 0.4%) and yield 7.53% vs a yield of 2.85% for the ords. In my view the savers should trade at a discount between 10% and 15%. The reason why they are trading at a premium is the preferred dividend, and the savings share premium should tighten when the shares go ex-dividend.</li>
<li>Grifols B shares are trading at a 38% discount, there is a trend towards the tightening of this discount since mid-March. The discount in Grifols B shares has averaged 26.7% over the last four years. I recommend setting up the trade <strong>long B shares traded on Nasdaq, short A shares traded in Madrid</strong>. The target is a 27% discount. Please note there is FX risk, which can be hedged.</li>
<li>There is an 8.1% discount in the <strong>Ericsson</strong> B shares. Setting up <strong>long B shares, short A shares</strong> seems tempting.</li>
<li>The spread of Handelsbanken B shares has reduced to a premium of 5.9%, vs a 11.4% premium in the last report in which I recommended <strong>a trade short B/long A shares. There are still grounds to keep that position on, </strong><strong>with a target of 2.5% discount, if you can get hold of any B shares</strong>.</li>
<li>
<strong>Schroders</strong>: I would keep an eye on the non-voting shares to set up the long non-voting/short voting shares trade during another market shakeout. It is now 23.9%, but it reached 42% on 19 March.</li>
</ul>

This report contains a table that shows select European companies with non-voting shares and ordinary shares. Non-voting shares are usually referred to as preferred shares (although the denomination varies in the different countries), whilst voting shares are usually known as ordinary shares.
For each company there is a graph showing the discount (or the premium) of one share class relative to the other, followed by a relative value trade recommendation, if I believe there are grounds for it.
Please keep in mind that these are highly leveraged trades, and that spreads may temporarily blow up in a hypothetical, but possible, market shakeout.
Recommended trades:


Carlsberg B shares are trading at a 12% discount vs. the A shares. A mean reversion trade could be set up, with a target of a 5% discount of the B shares vs. the A shares.
BMW exhibited a trend towards a reduction of the discount of preferred shares. Now the discount is 22.4%, as a result of recent volatility. I would recommend setting up a trade long BMW prefs, short ords with a target of a 12% discount.

Fuchs's premium seems to vary within a range and is probably liquidity related. It is 20% at the moment. The recommendation is setting up long ords/short prefs, with a 10% target.
The erstwhile favourite share class trade, Volkswagen, shows no obvious trade opportunity at the moment, in my view. Remember that voting rights are valuable in a company like Volkswagen, so an 7.2% discount of the prefs. relative to the ords. seems about right (vs. 8.2% in the previous report). But if you have a different (directional) view, believe that preferred shareholders are not going to get any rough treatment anytime soon, and look for size, you can set up the noughties' favourite trade, long VOW3/short VOW. It is difficult to think of any takeover attempt for Volkswagen.

Danieli: a 38.9% discount of the savers seems too wide. I recommend long savers/short ordinaries. A 30% discount is not a demanding target.
Telecom Italia savings shares are trading at a 4.3% premium to ordinary shares (vs a premium by mid-May of 0.4%) and yield 7.53% vs a yield of 2.85% for the ords. In my view the savers should trade at a discount between 10% and 15%. The reason why they are trading at a premium is the preferred dividend, and the savings share premium should tighten when the shares go ex-dividend.
Grifols B shares are trading at a 38% discount, there is a trend towards the tightening of this discount since mid-March. The discount in Grifols B shares has averaged 26.7% over the last four years. I recommend setting up the trade long B shares traded on Nasdaq, short A shares traded in Madrid. The target is a 27% discount. Please note there is FX risk, which can be hedged.
There is an 8.1% discount in the Ericsson B shares. Setting up long B shares, short A shares seems tempting.
The spread of Handelsbanken B shares has reduced to a premium of 5.9%, vs a 11.4% premium in the last report in which I recommended a trade short B/long A shares. There are still grounds to keep that position on, with a target of 2.5% discount, if you can get hold of any B shares.

Schroders: I would keep an eye on the non-voting shares to set up the long non-voting/short voting shares trade during another market shakeout. It is now 23.9%, but it reached 42% on 19 March.


Liquid Universe of European Ordinary and Preferred Shares: June Report

United Kingdom

Schroders PLC is an international asset management group.  The Group manages funds across all asset categories, including equities, bonds, cash, and alternative investments and Venture Capital.  Schroders clients comprise charities, insurance companies, public authorities, pension funds and unit trust holders.

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Schroders PLC (SDR LN)

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Liquid Universe of European Ordinary and Preferred Shares: June Report

This report contains a table that shows select European companies with non-voting shares and ordinary shares. Non-voting shares are usually...

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Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)