Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

I investigate special situations, pairs, and index rebalancing trades in Korea.

Korea / Special Sits, Pairs, Index Rebalancing

Nexen Corp Holdco Trade: Status Update & Recommended Action

Nexen Holdco Trade: Quick Reversion on Yesterday's 2σ Price Divergence

Event-Driven

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<li>
<a href="https://www.smartkarma.com/entities/16251" target="_blank" data-smartkarma-citation="entities:16251:1">Nexen Corp (005720 KS)</a> is one of the few Korean holdcos that make it suitable for stub trade. <a href="https://www.smartkarma.com/entities/14206" target="_blank" data-smartkarma-citation="entities:14206:1">Nexen Tire Corp (002350 KS)</a> accounts for 75% of Holdco NAV. Holdco discount stands at 43.73% to NAV. This is a bit higher relative to the Korean holdco average (40% to NAV).</li>
<li>Nexen Tire was up 6.58% yesterday on the announcement of a tire supply contract for Volkswagen Jetta. Price ratio currently stands at nearly -3 σ. This is virtually a record low. I'd do this stub trade, just on a small scale. Liquidity may be an issue. But borrow on Tire wouldn't be a challenge.</li>
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Nexen Corp (005720 KS) is one of the few Korean holdcos that make it suitable for stub trade. Nexen Tire Corp (002350 KS) accounts for 75% of Holdco NAV. Holdco discount stands at 43.73% to NAV. This is a bit higher relative to the Korean holdco average (40% to NAV).
Nexen Tire was up 6.58% yesterday on the announcement of a tire supply contract for Volkswagen Jetta. Price ratio currently stands at nearly -3 σ. This is virtually a record low. I'd do this stub trade, just on a small scale. Liquidity may be an issue. But borrow on Tire wouldn't be a challenge.


Nexen Holdco Trade: Opportunity of Stub Trade Has Come