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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)
  • holydawn
    , contributor
    Comments (127) | Send Message
     
    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
  • SA Editor Eric Jhonsa
    , contributor
    Comments (758) | Send Message
     
    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
  • jonchait50
    , contributor
    Comments (18) | Send Message
     
    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
  • gebertx
    , contributor
    Comments (3) | Send Message
     
    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
  • borkduck
    , contributor
    Comments (51) | Send Message
     
    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
  • borkduck
    , contributor
    Comments (51) | Send Message
     
    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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