Event-Driven

Brief Event-Driven: Orion Holdco/Sub Trade: Holdco’s Price Catching up Was Overworked, Time for Sub to Catch Up and more

In this briefing:

  1. Orion Holdco/Sub Trade: Holdco’s Price Catching up Was Overworked, Time for Sub to Catch Up

1. Orion Holdco/Sub Trade: Holdco’s Price Catching up Was Overworked, Time for Sub to Catch Up

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  • Orion Holdco/Sub duo is now above +2σ on a 20D MA. They made nearly 2σ jump in just two trading days. Price ratio is currently at a 120D high. Holdco discount to NAV dropped 4%p from 50% to 46% since last time we checked on Jan 24.
  • China easing wind began to blow into Korea since late last year. This China expectation had pushed up both Holdco and Sub. Sub had reacted more sensitively to it. Sub has undergone a price correction lately. Holdco has done a lot of catching up during this period. Now, Holdco surpassed Sub in terms of price return. Holdco climbed 32% from its 52W low. Sub went up 30% from its 52W low.
  • Holdco is preparing its own business operation, water purifier, in China. This may act as a divergence factor. But at this point, Holdco’s own business in China has no meaningful substance that can shake its NAV radically. They must be reverted back to mean. Their price return got reversed in favor of Holdco. Holdco’s price catching up should be done now. It is time to go long Sub and short Holdco.

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