Central Pacific Financial Corp. (NYSE:CPF)

What you cannot lose sight of is the fact that a massive amount of stock has been sold at $10, and that is the fair price of the stock as established by sophisticated investors and the company's board who have a fiduciary duty to sell at a fair price. Even more importantly, the company's economics don't come close to justifying the current price. Put simply, book value is about $400M, and there are roughly 40,000,000 shares outstanding. Banks ussually trade around book value, so $10 can be considered a fair price,and $19 is way out of whack.

People may be confused by the reverse split. Also, they may be confused by the fact that Yahoo shows 1.5M shares outstanding, but the correct number is roughly 40M as shown by the company's own website. Also, may be confused by insider purchases, which websites seem to be picking up incorrectly, insiders and investors purchased at the $10 price in a private placement.

I will be upfront about the fact that I have shorted the stock, because of the discrepancy between the market price and this price. I am posting to make sure everyone here realizes this and does not make irrational bets with their hard-earned money. The price will return to reality; see the company's own warning about this below. If you like the company (and some smart investors have invested at the $10 price), I would sell now and buy back in at a reasonable price.

From the comany's S-1:

If the Private Placement and the TARP Exchange are completed, our existing shareholders’ interests will be substantially diluted and the market price of our common stock may decrease to a level at or below the purchase price in the Private Placement.

As described above, we expect to complete the Private Placement and the TARP Exchange, assuming the satisfaction of the remaining conditions. Because a large number of common shares is contemplated to be issued in the Private Placement and the TARP Exchange at a price that is significantly less than the recent trading price of our common shares, the ownership interest of existing shareholders and our earnings per share will be substantially diluted and the market price of our common stock may decrease to a level at or below the purchase price in the Private Placement.