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The Short Case For National Bank Greece SA

Elevator Pitch

Why the present stock price (over $6) of National Bank of Greece is too lofty.

Thesis & Catalyst For National Bank Greece SA (NBG)

The present stock price of National Bank of Greece (NBG) seems over valued. The 06-30-2013 balance sheet shows a book value of E7.599 billion and 2.44 billion shares outstanding after the recapitalization. This puts book value per share at around E3.12, or $4.22 using a conversion rate of E1:$1.35. Banks in countries that have economies in much better shape than Greece are generally trading at a discount, or a price less than 100% of book value. Citigroup (NYSE:C), Bank of America (NYSE:BAC), and Bank of Ireland (NYSE:IRE) are examples of this. Why does NBG, in a country whose economy is still not out of the woods, command a premium to book value? The present price is around 150% of book value.

Valuation

There may be an excellent short opportunity here for investors. 75% of book value would put a target price around $3.17.

Disclosure: I am long BAC.