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Annaly Capital Management, Inc. Message Board

  • dundeeweather dundeeweather Sep 10, 2010 7:22 PM Flag

    What would be the pitfalls of

    buying say 5000 shares of NLY a few days before the ex date and selling a few days or a few weeks after the record date. Are there any considerations as to the ownership of the dividend or any restrictions/liabilities as to selling. The idea is to collect the dividend and move on as soon as the stock price is equal to or greater than the purchase price.. Does this make sense or am I all wet and missing something. Obviously if the stock price stayed below the purchase price, selling would dilute the dividend....but, I don't mean to answer my own question so why don't I wait for some serious input.

    Thanks,

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    • This appraoch can work sometimes - I purchased 5800 shares about 3 weeks ahead of the exdiv date in 6/2010 and the sold a week or so after the exdiv date and made money on the stock price plus the dividend - but this may not always work since the stock price will drop after the ex div date. The best way to approach this is ignore the stock price and just get paid the dividend every 3 months - sell when there is threat the gov't will raise interest rates. This takes big cohoonays esp. if you buy a large amount of shares.

    • Just be aware you are playing one of the oldest games in the book.

      What's more you're playing it against guys with better computers than yours, more money than you have and these days quicker access to the market than you have.

      Other than that there's no problem with the strategy of trading risk for a short time for profit/loss for a short time.

    • I hesitate to brag about this too hard, because if too many of us try it at some point it will stop working. But. . .

      Actually I do what you are asking about time after time, meaning almost every quarter. I have been poo-pooed on here. People say it doesn't make sense, maybe it will work one time but that is the exception, that the share price follows the ex-div and goes down, and basically that real investors should be in it for the long haul. Yada yada yada. But darn it, it has worked for me. Over and over again. Last quarter I bought it in the mid-17s, waited until I got the dividend, then waited til I could sell it for 18.10. Now it's in the 17's again and I am thinking about buying it before ex-date and selling it after, hanging on long enough just to avoid a capital loss. To answer your specific question, the only restriction I can think of is if you DO sell it for a capital loss (which I don't). In that case you'd have to be rid of it for a month, before buying it back, otherwise you would run afoul of the 30-day "wash sale rule" and not be able to take the tax loss.

    • >> Are there any considerations as to the ownership of the dividend or any restrictions/liabilities as to selling. <<

      No. You can buy one day before x-div date and sell on x-div date -- and you collect the dividend. (X-div date questions are way too common.)

      Good luck with your idea. LOL

      Wayne

 
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