The Curious Thomson Reuters Share-Price Arbitrage

Does anybody out there still believe in the efficient markets hypothesis? If so, I disprove it thus.

Thomson Reuters is listed both in the UK and in the US. As CEO Tom Glocer says, "a share in one place is exactly economically equal to another". And yet the shares in New York trade at a whopping 20% premium to the shares in London.

I do understand why this bothers Glocer: it makes a mockery of the idea of a company’s stock as a yardstick of its value and performance. But whatever the underlying reasons for this are, they’re unlikely to be within Glocer’s control. His main task should be running the company: leave the arbitrage to the hedge funds.

(Via Jones)

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