Friday, April 17, 2009

Violent Trade: M&T Provident Transaction Offers 4%+ Return in 2 Months

Buy: PBKS @ $9.30 or less
Sell: 0.171625 MTB shares per PBKS share @ $56.82 or more

M&T Banks is one of the solid banks in America. One of its investors is Warren Buffet. M&T has a strong presence in the northeast region of America. Their headquarters is in Buffalo, with operations from there down to Baltimore.

PBKS is a Baltimore-area bank. MTB has already outline plans to integrate PBKS which include laying off employees, providing a severance package, and giving preference to laid off employees to apply for job openings at MTB.

This transaction is actually much less complex than the FMCN transaction, since PBKS is a relatively small acquisition. Shareholders have already aproved the deal and all that remains is regulatory approval which should be a cinch.

Your net gain on this position will be at about 4%, not a great trade, but its worth exploring. Both shares are volatile and it may be possible to get a better yield of 6% in less 2 months.


  1. Have you factored in the dividend you will have to pay on the short MTB shares assuming the deal doesn't close before the stock goes ex in late May?

  2. nope, but I can close out today since the spread has tightened to about 1%