Data Shows PSLV Over-Allotment Option Exercised

I wonder when we’ll see a press release from the Sprott Physical Silver Trust ($PSLV) on this – the over-allotment option (aka: Shoe) has been exercised, which is no surprise – it’s free money for the underwriters, who buy shares at a 4% discount to the offering price.   We can tell that the over-allotment option has been exercised by looking at the data from the $PSLV web page, in the same manner that we did in the previous post.

Post secondary, pre Shoe:

Post Shoe:

Look at the shares outstanding, ounces held, and cash from yesterday and from today (which as you can see is really last night’s data) (just like we did yesterday), and you can see that the Shoe was exercised – the shares outstanding increased by the amount of the Shoe: 3.45 MM.   We can repeat the process outlined in yesterday’s post and calculate the price that the 1,300,000 ounces of silver to back these new shares was purchased at.  I come out with $30.70, implying that it was done yesterday.

Now, it sucks that the Trust had to pay more for the Shoe silver than for the Secondary silver, but if you work out the math, you’ll find that it was still accretive to NAV (by a sum total of TWO cents!) due to the fact that even when you include the underwriting fee, the shares were sold above NAV.


Jan 20th: Did JPM Bring Down EK in a Desperate Attempt to Plunder Silver?

Jan 19th: Paper and Physical Silver Prices Are Not Decoupling Yet

Jan 18th: PSLV’s Premium to NAV is Lower Than You Think

Jan 17th: PSLV Announces Secondary Offering

Nov 22nd: PSLV will not go out and buy $1.5 B in silver imminently

Nov 16th: Sprott Physical Silver Trust Files Shelf

Oct 12th: Sprott Sells 1MM PSLV

Sep 30th: Sprott sells 1.5MM PSLV – The last of the hedge fund shares

Sep 19th: Sprott sells 1.754MM PSLV

Sep 12th: Sprott sells 1.827MM PSLV

Aug 26th: Sprott sells 1.6MM PSLV

Aug 11th: Sprott sells 565k PSLV

Aug 2nd: Sprott sells 700k PSLV

July 23rd: Sprott sells 1MM+ PSLV

July 14th: Sprott sells 700k+ PSLV

April 28th: Sprott sells 1.6MM PSLV

March 12th: Sprott files to sell his PSLV shares

March 8th: “Misinterpreting PSLV’s Premium to NAV

July 18th: “Ask Eric Sprott Why He Won’t Buy More Silver for PSLV


disclosure: long $PSLV vs short $SLV pairs trade.  I’m also long $SLV unrelated – net long silver.


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