Saturday, December 09, 2006

Barclays Bank - Nice Gain over past few months.

If you happened to read my blog back on August 17th, 2006, about currency hedging with ADRs where I featured Barclays Bank as one of the ADRs to consider, perhaps you picked up some shares. If so, you should be quite pleased with your returns since then!

At the time, Barclays (NYSE: BCS) was trading under $50/share, and thanks to a weak dollar since then, and the new rumors/talk that Bank of America is looking to buy Barclays in what will be a massive merger transaction, the ADR share price of BCS has closed at USD $58.25. You may have just made 20% over the past few months, or more depending when you invested in Barclays.

The one thing I am not sure of now, is whether holding BCS during this speculation time is still the best way to go. With a cost-basis of around $45 on this latest cycle, I am looking at a 30% return in a relatively short period of time. Certainly this met, and even exceeded, my short-term objectives for playing currency-movements. The stock could rise further on speculation of increased bid-price during a takeover or whatever, but some of the excitement could also dissipate. I guess it is time to flip a coin. The original ownership reason (hedging against the US Dollar falling versus the British Pound) is still somewhat legitimate, though with the Pound pushing a 15-year high, I do not know how much more wind is in the sails of that price-movement-force.

Keep ADRs in mind in your investing portfolio, and look for solid stocks that can benefit from currency swings in addition to their fundamental strengths, and you will likely be in a decent position long term regardless.

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