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Gold/Mining/Energy : Canadian REITS, Trusts & Dividend Stocks

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To: kingfisher who wrote (437)	7/21/2000 9:52:45 PM
From: Lorne Larson	Read Replies (2) of 11633

R.Barbe Found your post on the CIBC arbitrage on PWI very interesting. I note they were still at it today. Sold 66600 PWI shares (net 31675), out of total shares sold today of 84912. Bought 505300 ROI (net 436675) out of total shares bought today of 601858. I really don't understand this play. I can understand the basic approach of going short the acquirer and long the target. However at this point PWI and ROI are essentially trading at par (.065 times 8.25 is .536, with ROI presently trading at .52; add in the .16 dividend and .065 times 8.09 is .525). How does CIBC make money on this trade? The only thing I can think of that the PWI offer isn't accepted, so PWI increases their offer, thereby increasing the price of the ROI shares and driving down the price of the PWI shares. My understanding is that this isn't likely to happen. As you stated it is quite impressive that the PWI share price has held up under the incredible selling pressure. Is PWI likely to make a substantial move up when CIBC unwinds its position? Regards

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