Thomson Reuters (Symbol-TRI)

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bbsj
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Thomson Reuters (Symbol-TRI)

Post by bbsj »

Does someone understand why TRI (TSE and NYSE) and TRIN (NASDAQ) trade at different valuations although it is one company? Laura Wallace said on BNN that TRIN is trading at 12-13% discount (theoretically, 6 TRI = 1 TRIN?).
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Post by parvus »

Thomson Reuters Stock May Offer Arbitrage Opportunity (Update1)
May 20 (Bloomberg) -- Thomson Reuters Corp.'s London shares are 14 percent cheaper than the stock traded in Canada, offering traders a possible opportunity to profit from the difference, according to analysts at UBS Investment Research.

Thomson Reuters, formed by Thomson Corp.'s $15.9 billion purchase of Reuters Group Plc, began trading April 17 in London as Thomson Reuters Plc and in Toronto as Thomson Reuters Corp. While both represent claims to the same cash flows, the London stock trades at a discount to the Canadian shares, UBS said.

``The law of one price, which argues that identical assets should trade at the same price, should apply,'' analysts Stephen Cooper and Dennis Jullens wrote in a note dated May 16. ``In the highly integrated and liquid markets of today, the movements between dual-listed stocks should be strongly correlated.''

Investors can bet that the gap will close by buying the London stock and selling an equal amount of borrowed Toronto shares, according to the analysts, who track accounting and valuation issues. Still, the trade carries the risk that the spread may stay the same or increase for long periods of time, they said.

UBS ``cannot think of a fundamental explanation for the difference'' between the stock prices, Cooper and Jullens wrote.

Polo Tang, the UBS analyst who follows Thomson Reuters, has two recommendations on the company -- a ``hold'' rating on the London shares and a ``sell'' on the Canadian stock -- because of the price discrepancy.
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Post by bbsj »

Thanks Parvus. So, the only disadvantage I see is that the dividends for TRIN will not be considered eligible Canadian dividend for tax purposes even though it is the same company.
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Post by JaydoubleU »

There's also the currency risk. You'll lose a small amount on each transaction. But a 14% spread is large enough to outweigh this disadvantage. If adding to TRI, I'd definitely add the PLC version.
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Post by Taggart »

JaydoubleU wrote:There's also the currency risk. You'll lose a small amount on each transaction. But a 14% spread is large enough to outweigh this disadvantage. If adding to TRI, I'd definitely add the PLC version.
Are you saying to buy TRIN? I'm not saying you're wrong, but why would you do that? This news has been in the public domain for a few days now, and if there was indeed an arbitrage opportunity, I would have thought the pros would have swarmed on this since late last week. I've already looked at TRIN's financial info at yahoo, morningstar, and MSN. There's huge discrepancies just in the market cap alone, so already the data is dirty.

From the company's website.
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Post by JaydoubleU »

Well you've right about that: "if you've read about it in the papers, it's already over," and "what looks too good to be true probably is," as the sayings go.

There's no free lunch.
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What's the Spread Now?

Post by iluvnascar »

If anyone has access to the British (vs Toronto) quotes, it would be interesting to see if the valuation spread continues.

TRI (in Toronto) continues to trend lower......and really looks attractive.
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Re: What's the Spread Now?

Post by Peculiar_Investor »

iluvnascar wrote:If anyone has access to the British (vs Toronto) quotes, it would be interesting to see if the valuation spread continues.

TRI (in Toronto) continues to trend lower......and really looks attractive.
In my humble opinion, TRI continues to trend lower as a result of its exposure to the US Financial industry, which is shedding jobs (seats) and hence reducing the need for the services that TRI provides. TRI (and TOC before it) is a range bound stock, that seem forever stuck between $35 and $50 (CDN), yet the analysts keep recommending it. In '08, it is taking another run at breaking below $30, which could spell trouble, or a buying opportunity :?
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Post by scampbell »

Don't know if this is what you're looking for, but here's a Thomson Reuters Plc quote:

http://www.corporateinformation.com/Com ... =885141101
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Post by Shakespeare »

trend lower as a result of its exposure to the US Financial industry
I've noticed that too. So, it isn't providing the diversification from financials that I wanted, and will be sold completely at a more opportune time.
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Post by iluvnascar »

This is complicated (I guess):

TRI (Toronto) is $32.07 (Cdn)

TRIN (Nasdaq) is $156.43 (US)

TRIL (UK) is $1300 (Pence)

Any idea how to compare them?
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Post by brad911 »

Shakespeare wrote:I've noticed that too. So, it isn't providing the diversification from financials that I wanted, and will be sold completely at a more opportune time.
I think investors should put that into context Shakes.

Before the merger Thomson's exposure (via annual revenue) to financials was 30% and shrinking due to increases in their other segments such as Tax & Accounting, Scientific, Healthcare & Legal. Legal stood at 46% of overall revenue as per the last TOC quarterly release.

When I look at Thomson & Reuters together I get a very clear mispricing here by the street and envy investors who can add more right now. While there are terminals at a lot of desks on Wall Street, not just any Joe Blow gets one of those things to play around with. If it weren't for asset allocation I would have been back in today @$32 and in the next few days I might do just that.

The FCF this beast will be throwing off in five years is going to make today's price look ridiculous and I don't believe they've come anywhere close to generating the potential number of subscriptions to other segments of their business yet.

But that's just my opinion.
*I hold shares in TRI*
Last edited by brad911 on 02 Jul 2008 16:04, edited 1 time in total.
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Post by iluvnascar »

TD has a screaming buy on TRI right now (issued June 20th). They believe selling is way overdone.....and have a 12-month target of $57. Unbelieveable.....but all it takes is one good one to make up for a lot of bad ones.
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Post by Pobre »

TRI (Toronto) is $32.07 (Cdn)
TRIN (Nasdaq) is $156.43 (US)
TRIL (UK) is $1300 (Pence)

Any idea how to compare them?
There are two parent companies.
1. Thomson Reuters Corp in Toronto, listed on TSE and on New York as TRI

2 Thomson Reuters PLC listed as TRIL on London. The former Reuters share holders received the latter shares in exchange for Reuters.

Also there is an ADR on New York; TRIN which I believe represents 6 TRIL shares. Sorry, I couldn't confirm that ratio after a quick check.

The TRI-T and the TRIL-L shares have the same underlying assets, however, to my knowledge it is not possible to buy TRI on Toronto and sell it on London. As you noticed the two are not selling at an equal price, even though they represent the same assets. Possible cause is former Reuters shareholders not being happy holding shares in the new company. Thomson has been buying back shares on the London exchange at about 14&...sooo they are buying the bargain version of their stock.

Talking heads on BNN have recommended buying TRIN as they say that eventually TRI and TRIL will be selling at closer to an equal price. Guess that would screw the dividend tax credit, but you gain 17% or so on the lower cost.
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Post by bbsj »

I have not been able to figure out why this huge discount on TRIN. Both TRI and TRIN are available in US $, and theoretically it should be TRIN = 6 TRI.
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Post by Peculiar_Investor »

brad911 wrote:
Shakespeare wrote:I've noticed that too. So, it isn't providing the diversification from financials that I wanted, and will be sold completely at a more opportune time.
I think investors should but that into context Shakes.

Before the merger Thomson's exposure (via annual revenue) to financials was 30% and shrinking due to increases in their other segments such as Tax & Accounting, Scientific, Healthcare & Legal. Legal stood at 46% of overall revenue as per the last TOC quarterly release.

When I look at Thomson & Reuters together I get a very clear mispricing here by the street and envy investors who can add more right now. While there are terminals at a lot of desks on Wall Street, not just any Joe Blow gets one of those things to play around with. If it weren't for asset allocation I would have been back in today @$32 and in the next few days I might do just that.

The FCF this beast will be throwing off in five years is going to make today's price look ridiculous and I don't believe they've come anywhere close to generating the potential number of subscriptions to other segments of their business yet.

But that's just my opinion.
*I hold shares in TRI*
For the record, I've held TRI (was TOC) shares since 1990! I've consistently felt they were undervalued, but I must admit I've gotten a bit tired (jaded?) of seeing analyst reports saying things will improve in the next "few" years. Many "few" years have passed, yet the share price has stayed range bound in the $35 to $50 area. Guess I'll need to wait another "few" more years.
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Post by Taggart »

Pobre wrote: Also there is an ADR on New York; TRIN which I believe represents 6 TRIL shares. Sorry, I couldn't confirm that ratio after a quick check.
Correct. adr.com shows trin with a ratio of 1:6

-------------------------------

edit: Also this from the June 27th Financial Times:

Thomson Reuters drops over fears of sales slowdown

By Neil Hume and Bryce Elder

Published: June 27 2008 03:00 | Last updated: June 27 2008 03:00

Thomson Reuters , the media and financial information group, dropped to a post-merger low as investors continued to worry about the impact of job losses and cost cutting on Wall Street and in the City of London.

As markets on both sides of the Atlantic suffered steep losses, Thomson shares which ended their first day of trading in April at £15.60, fell 5.6 per cent to £13.59.

Lowering its target price to £12.80, Morgan Stanley said it now expected sales at the Reuters Financial division to fall 2.8 per cent next year.

"Management does not believe that Reuters revenues will show negative growth in 2009 despite the experience of 2002 and 2003, when recurring revenues dropped by 4 per cent and 10 per cent as investment banking markets were impacted by the fall-away post the internet boom," Patrick Wellington, analyst, said.
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Post by Small Investor Activist »

Thomson Reuters owner of the Globe and Shill is going to the low 20s
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Post by SilverVette »

I have been selling TRI and buying TRIN, the ADR, which currently trades at $109 US or the equivalent of $18 per share US (TRIN consists of six shares of the British version of TRI). After converting the $18 to Canadian funds ($21.62) that still represents a 23 per cent discount to the $28 price of TRI. Sooner or later the gap will close; meanwhile I collect the dividend.

I am posting because I have a question someone here could answer. When I report my capital gain on the TRI shares should I be factoring in the TRIN purchases? Doing so would bring my gain down to zero but given that the stocks trade in different markets and have different symbols and valuations, should they be considered equivalent?
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Post by dreamcatcher »

SilverVette wrote:I have been selling TRI and buying TRIN, the ADR, which currently trades at $109 US or the equivalent of $18 per share US (TRIN consists of six shares of the British version of TRI). After converting the $18 to Canadian funds ($21.62) that still represents a 23 per cent discount to the $28 price of TRI. Sooner or later the gap will close; meanwhile I collect the dividend.

I am posting because I have a question someone here could answer. When I report my capital gain on the TRI shares should I be factoring in the TRIN purchases? Doing so would bring my gain down to zero but given that the stocks trade in different markets and have different symbols and valuations, should they be considered equivalent?
Wow that's quite an arbitrage.
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Post by SilverVette »

I think I got the idea earlier on this thread, though I can't say it has been profitable, given what's happened in the past few months. The price gap that existed earlier this year has only widened.

I'm happy to wait, as the company has a lot going for it, but I'm foggy about how to report the capital gains on the TRI shares. Would CRA require me to treat these as one stock even though they have different listings and valuations?
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Post by DavidR »

SilverVette wrote: I'm foggy about how to report the capital gains on the TRI shares. Would CRA require me to treat these as one stock even though they have different listings and valuations?
If you are realizing gains, it doesn't matter, because there is no such thing is a superficial gain. If you sell at a gain, you report the gain - it doesn't matter whether you repurchase within 30 days or not.

If you are seling at a loss, then you'll need to determine whether the two are 'identical properties'.
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Post by SilverVette »

I guess my question is whether I can use my purchases of these ADR shares to reduce my ACB on the Canadian shares so that I won't have to report a capital gain. They represent the same stock, but each ADR contains six of the UK version of Thomson and of course they are sold on the US exchange. The same, but different.
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Post by Peculiar_Investor »

Looks like Thomson is going to great rid of their London and Nasdaq listings. See Thomson Reuters to quit London exchange. From what I've understood, the London listed shares have always traded below the value of the Toronto (and New York) listed shares, but it was not possible to exchange the London listed shares for the Toronto (or New York) shares to take advantage of the pricing differential.
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Re: Thomson Reuters (Symbol-TRI & Symbol-TRIN)

Post by iluvnascar »

I've bought a lot of TRI over the past year....and continue to hold it waiting for a bit of a pop. But it seems kind of dead in the water even in strong markets. TD Waterhouse continues to highly tout the stock and it's a BUY on it's top-rated "Action List".

Just wondering.....has anyone seen a RECENT brokerage house report on TRI? It is sure acting like there have been a few so-so brokerage reports lately. I know TD has a $51 target on it; I know that Scotiabank has it on its list of Top Picks; and I know that Royal had it as a "Sector Outperformer" but downgraded it to "Sector performer" perhaps a month ago.
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