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CapitalSource Inc. Message Board

  • blondebluefl blondebluefl Aug 22, 2008 4:51 PM Flag

    CSE between a rock and a hard place

     

    If they maintain dividend, stock will not move due to fear. If they cut the dividend in half lets say, the stock will drop about 40-50% too due to fear. That's why they have not declared the dividend yet. They are hoping the stock price and the market sentiment strengthens in the next week or so.

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    • I disagree with the dividend cut/stock price drop thinking. By now, the only CSE investors who do not know about the very substantial dividend cut are people who do not follow the stock. There is abundant information in the marketplace about the cut to a "bank-like" level. It is in public filings. It is in the earnings and CapitalSource bank conference calls (and transcripts of them, which are on the CSE website). Brokers know. Institutions know. People who call investor relations about the dividend know. People who read message boards know. People with any kind of a responsible broker know. So, who are all of the passive, uninformed CSE investors who -- upon dividend announcement -- will run to their computers (or call their brokers) to dump their shares in a wave of panic? Just not likely at all, IMO. Lots of institutional value investors are in the stock now BECAUSE of the dividend cut and refined direction. My prediction is that the price will go up after the dividend cut, not down -- as people who might be waiting to buy (or buy more) on the erroneous "dividend cut price drop" thesis will see that a price plunge is not in the offing.

      BTW, I would have a totally different view if CSE hadn't uttered a peep about the dividend cut, or had been less direct about what it would be. But given the frank and repeated guidance the company has given over the past two months, the stock is poised to rise, not to fall.

      • 4 Replies to tweedledelicious
      • I agree a dividen cut is expected and should occure. The market will like it as management is doing what they should. Price will go up as a result.

      • "My prediction is that the price will go up after the dividend cut, not down -- as people who might be waiting to buy (or buy more) on the erroneous "dividend cut price drop" thesis will see that a price plunge is not in the offing."

        Bingo! I've been saying this for a while now but they ones who came trying to scare a handfull of people here want us to believe there is a 50% drop to come.....I believe bigger value investors are waiting to get the direction and assurance of the divi cut and jump in on the cut! you might have a 50% lift off on the call.

      • I hold a sybstancial position in this stock and did not buy it for the sake of the divident. If there is a small divident I consider it as an added feature or icing on the cake. I bought this stock as I do believe this bank is well run and will be around for a while and over time this stock will appreciate. I certainly have no intention of selling if the dividend is reduced. Besides I prefer to invest as being opposed to being a trader.

 
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