Yes, a surge in the demand for annuities will likely require a capital injection, but the corresponding book growth will then entail a surge in profits. Therefore, shorting CGF on that basis doesn’t make sense.
On the other hand, a sharp decline in asset values not accompanied by a devaluation of annuity liabilities (as could be the case in the event of large-scale defaults in the bond portfolio) would force CGF to raise capital without a simultaneous increase in earnings.
But, if that is the rationale for shorting, there are much smarter ways of doing it. For instance, one could buy protection on a credit index using credit default swaps: by doing that, the shorters would at least know what it is exactly that they’re shorting (whereas the details of CGF’s bond portfolio aren’t public).
Or they could just buy out-of-the-money put options on an equity index.
Don’t you think?
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Last
$6.73 |
Change
0.100(1.51%) |
Mkt cap ! $4.651B |
Open | High | Low | Value | Volume |
$6.69 | $6.83 | $6.64 | $5.426M | 803.8K |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
1 | 4064 | $6.72 |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
$6.78 | 100 | 1 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
1 | 2284 | 6.620 |
1 | 3034 | 6.590 |
1 | 1000 | 6.510 |
3 | 6600 | 6.500 |
1 | 5470 | 6.450 |
Price($) | Vol. | No. |
---|---|---|
6.840 | 1530 | 1 |
6.850 | 4273 | 2 |
6.860 | 50 | 1 |
6.890 | 5629 | 1 |
6.930 | 2248 | 1 |
Last trade - 16.10pm 09/08/2024 (20 minute delay) ? |
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