There was heavy trading in Dehring, Bunting and Golding shares Friday as investors continued to snap up the stock, despite the one-day pause in trading of the stock after it approached circuit breaker point mid-week on news that the country's largest commercial bank had shown interest in acquiring the investment bank.

At the last trading day of the week, DB&G was among the top three volume leaders with some 742,820 units or 12.61 per cent of the total volume traded.

The total units traded amounted to just over $14 million. The DB&G stock closed at $20, after trading as high as $21.27 during the day.

In contrast, trading in BNS was slim, with some 156,582 units with a value of just over $3 million to close at $21.53 after gaining 53 cents.

Commenting on Friday's trading, vice-president at Pan Caribbean Financial Services, Stephen Gooden, explained that usually in acquisitions, more interest is displayed in the company that is being acquired, which, in this case would be DB&G, hence the aggressive trading in the stock.

Much cheaper than BNS

"From a relative valuation perspective, DB&G is much cheaper than BNS. Before the news came out, DB&G was trading 5.6 times its earnings while Scotiabank was closer to nine."

Gooden reasoned that speculators "are assuming that if BNS is to buy out DB&G, they are assuming Scotiabank would have to buy DB&G at a higher multiple than it is trading at now. They are probably expecting BNS to pay a higher price closer to the industry average, which is around 8.5 times."

ashford.meikle@gleanerjm.com