Saul Sterman

Special Dividends Not All That Special

Very clear and concise, thanks.

A reverse example is TOPT. In March 2006 they declared a special dividend of $7, if memory serves me, and the stock shot up by $7, only to fall again the day after ex-date. Apparently investors were/are confused about how an ex-date works (hint, hint Asif!), so the stock actually fell $2 on the ex-date! This is so unusual that until today, many data providers have erroneous charts for TOPT.

If a 2006 chart does not show a spike to $18 in March 2006, then the chart is wrong. I tried to convince Worden to correct their Telechart data… SA media provider quotemedia.com chart is correct.

I never got around to finding out what happens if you short the stock at $18 (including special dividend payment). Does the short seller have to pay the dividend? Does anyone know how this works? At the time I recall asking several brokers and none of them knew the answer! Perhaps they were all short and pocketing the proceeds – just kidding!

Typo correction – “cut to junk status by Standard & Poor’s”

Saul Sterman
CrossProfit
(The CrossProfit site is undergoing a total revamp and should be back up 2/15/07)