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Sycamore (SCMR +7.2%) jumps to $15.77 after its board declares a $10/share special dividend that...

Sycamore (SCMR +7.2%) jumps to $15.77 after its board declares a $10/share special dividend that will be paid on Oct. 11 to shareholders on record as of Oct. 1. Many have been calling on the optical networking hardware/software vendor to part with a large chunk of its giant cash hoard. Sycamore also says it posted FQ4 (ended in July) revenue of $16.8M, above the $12.9M estimated by the sole analyst who covers it. (PR)
Comments (6)
  • ok, please forgive my ignorance, but where's the catch? If you buy a share of stock in SCMR prior to Oct 1st, you automatically receive a $10 special dividend?
    20 Sep 2012, 01:18 PM Reply Like
  • Yep. But expect the stock to go down (perhaps to the tune of $10) because of the dividend.
    20 Sep 2012, 01:23 PM Reply Like
  • How did the company build the cash hoard? If the stock went to $10 post distribution, you would have still made $4 for a 2 week investment. The market seems to be saying the rump is worth only $5-6. The Company just reported FY results and had revenues of $57 m (yesterday) but did not report earnings. They have been losing money. Insiders own 30% of the company.
    21 Sep 2012, 07:50 AM Reply Like
  • There has to be something fishy here ... a normal investor would go long on the Stock, collected the $10 and assume the stock goes to $5, buy PUTS at the $15 strike ... what am I missing ?
    21 Sep 2012, 03:21 PM Reply Like
  • I'm being told that as of close of business today, ALL SCMR options will have their strike prices reduced by the amount of the special distribution.

     

    This means that a put purchased today at a strike of 12.50 will automatically become a put with a strike of 2.50 tomorrow. Or so I am reliably (?) informed by several brokers.

     

    bd
    26 Sep 2012, 01:30 PM Reply Like
  • Looks like my brokers were wrong. Again. Surprise.

     

    According to the CBOE, the strikes will remain unchanged; owners of puts will have to deliver $1000 along with the shares, and owners of calls will receive the same amount along with the 100 shares. Here's the doc (courtesy of Raj):

     

    http://bit.ly/QQYqua

     

    bd
    26 Sep 2012, 02:56 PM Reply Like
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