Grifols (GRFS) – Discount Mean Reversion – 8% Upside

Current Discount: 36%

Average Discount: 28%

Upside: 8%

Expiration Date: TBD

This idea was shared by DiSam

 

Grifols is a Spanish pharmaceutical and chemical manufacturer (primarily blood-plasma based products). The company is listed on Madrid's Stock Exchange with two classes of shares - voting class A (GRF.MC) and non-voting class B (GRF-P.MC) preference shares. Class B shares are also listed on Nasdaq.

Class B shares non-voting shares used to trade at a discount to ordinary GRF shares. Due to the recent market turbulence, the discount has widened from the average 28% to the current 36%, which marks an opportunity to play on the eventual discount mean reversion and pocket in 8% profit.

There are 426m class A shares, however, 43% of them are held by the founding family and certain significant holders. 261m of class B shares are all free-float.

Both classes receive nearly the same dividend payments. Preferred shares are eligible to €0.01/share preferred dividends, which are paid in Q2 of the following year. It seems that so far the final payment for 2019 hasn't been done yet and I haven't found any information on that from the company. Anyways, this €0.01/share payment should play no part in the discount of this size.

There's plenty of borrow for hedging on IB at <1%/year fee.

grf discount

 

grf shareholders

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