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Dolby Laboratories, Inc. Message Board

  • fkamkam fkamkam Dec 14, 2012 12:51 PM Flag

    Why the drop after dividend?

    Anyone know why we going down a dollar a day like clockwork?

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    • For an equity like DLB that has not paid a div in a while, many long holders are taking their profits as long term capital gains, so they sell before ex-dividend day[today]. They sell because now the stock will be four dollars lower. The company just gave up four dollars in value so the price is automatically adjusted down by the dividend amount. Then after the adjustment they have an opportunity to get back in buying more shares than they sold perhaps at a lower price than the adjusted price. Dividend paying stocks will often keep going down, maybe because stop loss programs are engaged. So today it should open at 31.37. If it drops to the high twenties or something, that is when the recent long sellers would get back in having made six dollars instead of four.
      In a strong bull market the opposite happens. A stock will immediately rally off the adjusted floor. I have purchased stock in the afternoon just before exdividend when others are selling, getting a reduced price. Then since I apprehended the shares before exdividend, I get recorded for dividend payment the next day. then the stock recovers to pre dividend prices in the next week and I sell, having gotten a free dividend. Those who bought at 32.50 have a good chance of achieving that. I don't think that will happen this time. Market sentiment is not there for a quick rally back to predividend prices.

      Anyone who shorted the stock before today must pay the dividend to the owner of the stock they borrowed. That is a hefty gamble.

    • I dont know, many shorts in the stock, people must not want the dividend. Im a buyer at these levels.Seems to be over sold already from my perspective. I think dolby is finding its way back with income to accelerate from tablets, video games, ect. Sound will soon be the next thing people will want in there small devices

      Sentiment: Buy

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