Rochester, NY 8/27/2009 4:01:10 PM
DSW Dominant determinant of RVI's
DSW Inc. DSW
DSW Inc. While RVI does have certain liabilities related to its divestitures of other businesses and its own corporate costs, its ownership in DSW is now the dominant determinant of RVI's value as a company’s trades on the for almost $600 million, meaning RVI's ownership share is currently being valued by the market at $368 million. But RVI trades for only $169 million, less than half of its stake in DSW!
Buying RVI stock, however, is not guaranteed to return 100% even if these stocks converge over the next few years. This is due to the fact that it's entirely possible the market is overvaluing DSW and that its price will eventually come down. But by simultaneously buying RVI stock and shorting DSW, however, the investor is protecting himself from a decline in the value of DSW. As long as the values in these companies
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