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Strategies & Market Trends : Z Best Place to Talk Stocks -- Ignore unavailable to you. Want to Upgrade?

To: Joe Stocks who wrote (42686)	8/9/2002 10:14:48 PM
From: DanZ	Respond to of 53068

The disparity between RRI and REI has grown steadily in recent weeks. REI is now trading 2.6 times that of RRI. The ratio was only about 1.5 times a couple of months ago. I believe that people are selling RRI and buying REI to capture the dividend and get away from the merchant trading business. This might continue until the spin-off is complete, but I think that RRI will eventually outperform REI. Even given REI's 64 cent per share annual dividend, it doesn't make sense for REI to trade 2.6 times that of RRI. At today's close, REI had a market cap of $3.31 billion and RRI had a market cap of $1.23 billion. Once the spin-off is complete, I think that the disparity will begin to shrink as the two companies get their own identity and the arbitragers go away.