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 Holdco Trade: Opportunity of Stub Trade Has Come

Nexen Corp Holdco Trade: Status Update & Recommended Action

Event-Driven

<ul>
<li>Nexen Sub made a run yesterday. It climbed 6% yesterday. Holdco stayed flat with a 0.34% gain. This created a huge price divergence. The duo made nearly 2σ gap in one single day. They are now slightly below -1σ on a 20D MA. Holdco discount is 46% to NAV.</li>
<li>This much divergence in a single day is very rare for the Nexen duo. Sub's stronger 4Q numbers should have been already priced in. Yesterday was more of a sentimental boost, thanks to HMG. Short-term wise, further price pushing up on Sub is unlikely.</li>
<li>The duo is well below 120D mean and 2Y mean on a 20D MA price ratio. Price divergence should be held back at the current level. I'd go for a quick reversion in favor of Holdco. Just, Holdco liquidity can be a major issue to many of us here.</li>
</ul>


Nexen Sub made a run yesterday. It climbed 6% yesterday. Holdco stayed flat with a 0.34% gain. This created a huge price divergence. The duo made nearly 2σ gap in one single day. They are now slightly below -1σ on a 20D MA. Holdco discount is 46% to NAV.
This much divergence in a single day is very rare for the Nexen duo. Sub's stronger 4Q numbers should have been already priced in. Yesterday was more of a sentimental boost, thanks to HMG. Short-term wise, further price pushing up on Sub is unlikely.
The duo is well below 120D mean and 2Y mean on a 20D MA price ratio. Price divergence should be held back at the current level. I'd go for a quick reversion in favor of Holdco. Just, Holdco liquidity can be a major issue to many of us here.


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