Everybody knows the stock will sell off on ex-dividend day ~ the resulting sell off could be greater than the dividend payout. If you buy it for $1.45, you are betting it will hold above $1 in January, and that just to break even... since the company has no apparent revenue source remaining, and since the House is likely to shut down the gov in January (and because the FED is likely to start "tapering" soon), there is little hope ENZN will trade above $1 in the very near future. To make matters worse, as ENZN slips below $1, NASDAQ initiates threat of delisting.
Why would some of the biggest hedge funds in the country buy a giant position in this company and then shoot themselves in the foot?
How much of this selling is retail investors being systematically shaken out of this stock? The Hedge funds are holding onto their shares people.
He bought in several years ago when ENZN had a large cash position (several 100M dollars) and the stock traded in the high single digits. Since then most of ENZN's cash horde has been transferred to the activist shareholders pockets from the company coffers though special dividend payments. A strategic alliance was announced with Hisun and subsequently ENZN assigned its existing licensing agreement with Hisun to a newly created entity Belrose Pharma. Several former ENzn employees now work for Belrose.
What happens next is anyone's guess.
that's right: it's all about how much money you expect this company to rake in before it's royalties expire and it's no longer bringing in any money. They have to net another 40m to cover the current market cap. I say that'll happen. The big news here is that management is indeed committed to paying out dividends, instead of trying to steal the royalty stream away from stockholders, like might've happened previously with the IP under past management. The belrose deal is unclear--- there may be more value here. I see it as a conservative play, nice margin of safety, small chance of big return. A small holding for me.
I decided not to play this dividend stock after some research.
1. This company issue dividend because they wanted to sell their business or asset, rather than expand operation like most other companies.
2. Because of this, the stock price does not bounce back like most other dividend play stock. When the company issued $1.6 dividend/share on June 3, 2013, the stock price dropped $1.6 from $3.18 to $1.63, which was slightly higher than yesterday's close price of $1.58. Stock holders get only $0.05 gains if the price holds at this level in last 6 months. After this dividend issuing on Dec 23, 2013, the stock price will drop $0.45 and most likely not bounces back.
3. If we know the company's revenue amount and how long it lasts, holding this stock and total dividend amount form now on might be more than the amount lost in stock price decrease down the road.
Before I know the information in #3, I will not touch this stock.
Hope I am wrong.
let's see, according to the historical data on Yahoo:
Jun 4th, 2013, close price: $3.18, Jun 5th, 2013, dividend paid $1.60, close price: $1.60
Dec 5th, 2012, close price: $6.93, Dec 6th, 2012, dividend paid $2.00, close price: $4.88
The company definitely has a few more quarters of positive earnings/royalty payments. This translates into more dividends. Why would people sell if it's likely there will be another .45 dividend? If the stock drops to a dollar and they pay another .45 then that's a 45% rate of return. Something does not make sense?
I think many veterans have sold out. Even I sold half my position at about 1.70. I think the divi announcement is great news-- shows that new management is committed to paying divis. However, with the fast depleting royalties, there isn't much upside here. Unless, miraculously, something comes from the belrose deal.
I need a lot more coffee. My spelling is horrible! Sorry about that!
This is good news. How does this figure into the big picture though?
I'll happily sit on my stock and collect a couple more healthy sized dividend payments.
Sentiment: Strong Buy