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Dr. Kris
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Dr. Kris hails from the land o' lakes, beer, bratwurst, and Bucky Badger. She traded in her cheese hat for a propeller beanie and has never looked back. She has two degrees from MIT because one just wasn't enough. Her life goal was to figure out the universe and having done that (at least to her... More
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  • Last day to max-out on MAXY 4 comments
    Dec 14, 2010 1:25 PM
    This just came to my attention this morning and since this play must be executed today, I'm dashing it off right now.

    On November 22nd, biotech firm Maxygen (NASDAQ: MAXY) announced two special dividends. The first dividend involves the stock of its subsidiary Codexis (NASDAQ: CDXS) whereby for every share of MAXY stock, the shareholder will receive 0.19 shares of CDXS. The other dividend is a one time cash distribution of $1.00 per share.

    I'm not entirely sure what the cost basis for the stock dividend will be, but from what I inferred from the press release (which you should read if you're considering this trade) is that the transaction date was December 3rd and at the close of that day, CDXS was trading at $10.00. Using that as a benchmark and given that the current price of MAXY stock is $6.85, your return on this investment would be [($10.00 x 0.19) + $1.00]/$6.85 = 42%. That's fantastic! Using these numbers, your breakeven point would be $6.85 – $2.90 = $3.95. The stock hasn't been that low in over two years. (The weekly chart shows strong support at $5.40.)
     

    The ex-dividend date for both of these dividends is tomorrow, December 15th which means that the last day you can get into this trade is today. The pay date for the stock dividend is today (December 14th) and the pay date for the cash dividend is December 28th.

    Here's to an early stocking stuffer!

    Disclosure:  Long MAXY
     



    Disclosure: I am long MAXY.
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  •  
    Dr. Kris

    I read the press lease at it appears that there is no downside to the play other than if the price of MAXY falls. I am correct in this?

    Thanks for the tip.
    14 Dec 2010, 02:18 PM Reply Like
  •  
    That's what I'm looking at, and if anyone knows something different, please let me know.

    Dr. K
    14 Dec 2010, 02:38 PM Reply Like
  •  
    Dr Kris

    I think you made a miscalculation in your equation on the Maxy play.
    From what I've read you receive .19 cents not % for each share held plus the $1.00 per share on the 28th of this month.
    So if you bought shares @ $6.85 yesterday.. $1.19/$6.85= 17.37 % return if the stock holds at that price. $6.85-$1.19 = $5.66 would be your breakeven point. Current Maxy pps right now is $4.00. That's a loss of $1.66 a share. Not such a great stocking stuffer unless I am wrong with my math.
    15 Dec 2010, 04:16 PM Reply Like
  •  
    Here's the excerpt from the press release: "As a result of the distribution of Codexis common stock, Maxygen stockholders will receive approximately 0.19 of a share of Codexis common stock for each outstanding share of Maxygen common stock they own at the close of business on December 3, 2010 (the record date for the stock distribution)."

    Here's the link: articles.moneycentral....

    The stock did drop in adjustment as expected but even if it takes a year to get back to par, a 40% return is pretty decent.

    Thanks for your comment and happy holidays!

    Dr. K
    17 Dec 2010, 10:31 PM Reply Like
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