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Legg Mason Inc. Message Board

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  • a transfer of property that is made to swindle, hinder, or delay a creditor,
    or to put such property beyond the creditor's reach. (legal dictionary)

    When companies systematically pay out more than they earn,
    they're also potentially harming their creditors by leaving them with less security
    for their loans in the event something goes wrong.

  • Dividend Doctrine of Investors Liberation Movement
    Dividends can and should be paid ONLY when the company has nil debt,
    its business outlook is satisfactory, it has "surplus" cash defined as money it
    can't productively use in its business, and its stock price is too high to
    appropriately repurchase (meaning without making the remaining shares
    less valuable fundamentally). Any dividend declaration in violation of these
    four conditions is ipso facto NOT in the best interest of shareholders.
    If a dividend is paid, it should be done annually to save expense, occur when
    the company's cash hoard is most abundant, and timed in a manner to
    minimize the tax consequence to shareholders.
    REITs generally should not pay distributions exceeding the legally required
    minimum of 90% of taxable income following the same timing principles.

    Dividents are now being declared by many public companies whose shares are held
    by intermediary institutions on behalf of their unsophisticated holders for completely
    illegitimate reasons that the unsophisticated holders would never approve if they were
    aware of the damaging effects. That's why the First Iron Rule for independent investors
    and the slogan of Investors Liberation Movement is "Never buy mutual funds!"
    Someday, I hope that I.L.M. can approve mutual funds operated according to
    our doctrines because I realize that many ordinary people can't spend the time
    to personally manage their investments.
    /s/ William H. Brandt, Acting Chair

  • LEGG MASON sucks big time. Check out Ultimate Stock Alerts (take a look online for them) for

    better.

LM
57.27-1.03(-1.77%)Feb 27 4:03 PMEST

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