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Frontier Cuts Dividend, Stock Pops

|Includes: Frontier Communications Corporation (FTR)

Frontier Communications Corp. (NYSE:FTR) announced its earnings last week after close on Thursday with an earnings outperformance and a dividend cut (as I predicted back in November).

The stock continued its upward trend from Wed and Thursday after a Tuesday close at $4.06 to Wednesday's close at $4.31 to Thursday;s close at $4.46 (still prior to earnings announcements) to Friday's open (prior to management's discussion) at $4.61 to Friday's close at $4.78. These types of movements leave one wondering if there was some insider trading somewhere. Clearly, FTR had positive announcements and removed uncertainty around the dividend. However, the majority of these gains from $4.06 occurred prior to the announcement. Perhaps shorts were covering prior to the announcement having had a good run? If the stock continues a downward descent, I would attribute the pop to shorts covering as much as any other reason.

Based on friday's close FTR now yields 8.4% on a $0.40 forward annual dividend and a closing price of $4.78, access line customers has declined to 5.27 million. Its 10-K has not been posted to yet.

Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in FTR over the next 72 hours.

Additional disclosure: Disclaimer: This article is for informational and educational purposes only and shall not be construed to constitute investment advice. Nothing contained herein shall constitute a solicitation, recommendation or endorsement to buy or sell any security.