How Can This Valueless Irish Bank Have Such an Enormous Market Cap?

In this video from Tuesday's Where the Money Is as part of the Motley Fool's "Ask a Fool" series, Fool banking analysts Matt Koppenheffer and David Hanson take a question from a Fool reader, who asks, "If Allied Irish Banks (NASDAQOTH: AIBYY  ) in Ireland is 99% owned by the state and almost valueless in piles and piles of debt, how can it have a market cap of greater than $100 billion?"

With an abysmal 34% non-performing loan ratio, AIB could seem like a very questionable investment. But with so much of the stock being government-owned, Matt's opinion is that the few shares remaining on the market are subject to a lot of speculation by day-traders, and that's the force that's determining the stock's share price on the market today. Matt and David warn that this unusual situation is one investors would do very well to stay away from.

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  • Report this Comment On January 30, 2014, at 1:19 PM, nofoolingforme wrote:

    What short memories you guys have. Motley Fool recommended AIB as one of the stocks in their billion dollar portfolio a few years ago. They didn't do their homework and said that AIB was not heavily invested in the faulty mortages and would be unscathed by the monetary crisis that was unfolding. Motley Fool lied. I will never trust them again. No one else should believe that they exercise due diligence before recommending a company.

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