Night Heron
Special situations, arbitrage, short only, Deep Value

ADRs Of Allied Irish Banks Worth Just $1.19; Will Drop To That Level Within 7 Months

The American Depositary Receipts (ADRs) of Allied Irish Banks (OTCQB:AIBYY) may be the most misunderstood ADRs in the US. Until August 2011, AIBYY was a normal ADR. Each share of AIBYY traded on the New York Stock Exchange and represented 10 "underlying" shares of Allied Irish Banks, which traded under the symbol AIB on the Irish Stock Exchange.

AIBYY is still trading as though it were a normal ADR worth 10 shares of AIB. For example, on Tuesday (April 29, 2014) AIB closed in Ireland at €0.121 Euros, which at current exchange rates is $0.167 dollars. The same day in the US, AIBYY closed at $1.66, almost exactly 10 times AIB's price.

This would be fine if AIBYY...

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