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# Old Republic International Corporation Message Board

• yankfromct yankfromct Dec 19, 2003 10:11 AM Flag

## 3 for 2 or stock dividend?

I am a bit confused re: 3 for 2. What I read seems to imply that if you held the stock before 12/15 you would get an additional 50 shares as a "dividend" but if you buy the shares after 12/15 you will not get the stock dividend. Several posts refer to 3 for 2 split but I don't think they are the same. If this is a dividend vs split my sense is that if you buy between 12/15 and 12/30 you are going to have those shares diluted.

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• Sir Yankfromct,

Please read Yahoo Headline item/article from 12/4/03. This article explains this process very well, plus points out how great a value ORI is at even \$40 per share since reserves are equal to \$77.00 a share. If you owned the stock on 12/15/03, you would get a special dividend of \$1.00 per share payable on 12/26/03. This dividend is on top of 67 cents per share in dividends if you owned ORI for the whole year. At \$1.67 per share versus a price of \$37.45 that is a dividend return for the year of 4.46%. How many one year CDs pay that rate with only a 15% tax. In high tax state like California you would need a 9% CD to equal that 4.46% return. Someone please tell me how many safe one year 9% CDs are out there.

The stock split is for owners of ORI on 12/15/03 to be paid 12/30/03. 3:2 means 50% more stock or the price goes from \$37.45 to \$24.97. Al is doing this so more people can afford this stock. Last time he did this in 1998, the stock was way over \$30 a share in short order. Needless to say this is a STORNG BUY.

• I don't think anyone answered YankfromCt's question.

Yank's question is this: if anyone buys the stock before the 50% dividend is paid, but after the record date to receive it, aren't they being ripped off? Here's why he's asking...

Assume "investor A" owns 100 shares on December 15. Let's also assume that the stock is 36.00 per share (to make the math easier) and stays there.

On December 30, when the 50% dividend is paid, "investor A" will own 150 shares and the price will be adjusted to 24.00 per share to reflect the additional shares trading.

If "investor B" buys 100 shares on December 22, for example, he won't be eligible for the 50% stock dividend. He'll pay \$3600 for 100 shares. Then on December 30, when the dividend is paid and the price adjusts to \$24 / share, he'll immediately lose \$1200.

I'm sure there's a logical answer. What is it?

• You ALWAYS get the stock or the dividend as long as buy before the "ex-dividend ex-split" price change occurs.
Otherwise it would make no sense and no one would trade in the stock between 12-15 and up to the ex-dividend ex-split date...

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