The Stock Market Companion investment in the Bank of Ireland (Ticker: IRE) is UP +44% since November 29th.  Last night we reported to subscribers about new Irish legislation that gives the Irish government a long arm into banking activities.  Here’s the link.

Today, the Bank of Ireland (Ticker: IRE) stock was down to $2.45/share on  news about this new legislation and trouble in general related to European sovereign debt (today, Spain is in the cross-hairs). From a technical price standpoint,  things didn’t look particularly good for the stock.   The 12/6 to 12/7 GAP UP in price from $2.16/share to $2.53/share looked like it could get filled below the $2.47/share low of 12/8.  There is no price support from between $2.16 and $2.47. (In other words, the stock could GO DOWN more to fill the space in price to $2.16/share).

BUT the stock HELD the $2.45/share lows today and found significant buyers down there to rapidly push the stock back above $2.80/share!  That’s a very good sign.  Of course the stock can still go down from here if there appears to be trouble anywhere with the bank or any other related concerns.  The fact that buyers came in here today is good.  The stock could have languished in the $2.45/share area for days or weeks as the effects of this legislation and trouble with European sovereign debt keep stock investors at bay.

Common stock shareholders of Bank of Ireland stock have taken a -97% hit on their equity, relative to 2007 highs.  Some bondholders have taken a -50% hair-cut.  The Irish government is requiring more from the Bank of Ireland than what the Basel requirements are for Tier 1 capital.  Instead of 8% capital, the Bank of Ireland must hold 12% by Feb./March 2011.   As long as the bank can meet these additional requirements and continue to clean up their balance sheet, then such additional requirements actually serve us as investors in several ways.  The Stock Market Companion investment in Bank of Ireland common stock is based on the premise that things cannot get much worse for the Bank of Ireland and that this strong and proud island nation is beginning to do all it can to improve the situation.  We believe that if they are successful, over time the Bank of Ireland common equity may close the gap in losses between junior bondholders and common stock holders.

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Please remember – at the Stock Market Companion we do not and cannot give individual investment advice. According to the State of Washington RCW21.20.005 the Stock Market Companion is not a Registered Financial Advisor and we do not render any advice on the basis of the specific investment situation of a particular individual. This information is for a wide readership and is not intended for any particular individual,  and under no circumstances should our Market Update or Watchlist be considered an investment recommendation or plan for any specific individual.  By accessing this material, you agree that the Stock Market Companion will not be held liable for any actions taken by a subscriber or other parties.  Please seek the counsel of a broker or other licensed investment professional for accurate pricing and concerning the suitability of all investments that you may be considering. Disclosure : You understand that the Stock Market Companion holds positions in the above mentioned securities.  Based on market related or personal events these positions may change without notice.

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