Seeking Alpha
  • Ocean Man
    Way to go Sycamore! SCMR, a $15 stock, declares a $10 special dividend just to say "Hey, idiots, we've got more than $15 per share sitting
    9/20/12
    Reply (15)
    • Ocean Man: here in cash for cripes sake! Where's the love?!"
      9/20/12
    • chuckholladay: SBGI is also paying a special $10 div but it is trading @ 36.70.
      9/20/12
    • Ocean Man: They're doing it to get cash to shareholders before divvy taxes go up - more will be coming soon.
      9/20/12
    • chuckholladay: They are also doing it to keep someone from buying the company with their own cash.
      9/20/12
    • Clayton Rulli: WOW. why wouldnt you buy SCMR just for this?
      9/20/12
    • Clayton Rulli: buy shares then buy a put, then get the 10$ dividend? seems like you cant lose
      9/20/12
    • Ocean Man: Puts get adjusted. If you buy it in a taxed account, you'd get $10 back and get taxed 15% on it, and be left with a $5 stock (which might go
      9/20/12
    • Ocean Man: up) but you'd start out down $1.50 in taxes. Better to buy in a 401k or IRA.
      9/20/12
    • Clayton Rulli: hmm im not following. how can you know the stock would definately do down the same amount as the special dividend?
      9/21/12
    • chuckholladay: That is the way the game is played on ex-date the stock opens down the amount of the dividend.
      9/21/12
    • sundate36: Exactly, look what happened to WCRX - it recently dropped exactly by $4.00 on the day it paid the special div.
      9/21/12
    • JayWright: I thought PPS drops by amount of dividend on ex-date was common knowledge among traders. a noob like me even knows that.
      9/21/12
    • r2q5: Why would anyone sell it for under 10? The price will rise about 5 in minutes since no fool will sell it for 5.
      10/1/12
    • r2q5: I will go ahead and put in an order at minus 10 just to see if anyone is that stupid.
      10/1/12
    • Ocean Man: In theory, the valuation includes $10 per share in cash on the balance sheet that will no longer be there. But I agree that 5 is too low.
      10/1/12