This scam for insiders to cash out (i.e. huge special div) was recently used by retail chain The Buckle (BKE), which declared a special dividend of $3.00 per share. Seems absurd that a retailer entering such a challenging environment would have paid our 1/3 of their cash at such a critical time, esp.since they are still expanding. To make a long story short (no pun intended), the stock has dropped by a third since the stock went ex-Div on 10/15, and by nearly half since the announcement of the spec. dividend on 9/15. At $2.00 per share for K-Swiss (on a $13.00 stock), the abuse by the Board is even more egregious than at The Buckle, where the $3.00 was less than 8% of the stock price at the time of the announcement. Does that help answer any questions in any of your analyses?
I'm new to investing, but I thought the stock would shoot up when they made this div announcement. But it has stayed in $11-12 range. I want to pick some up right now and just sell it on Dec 11th, after qualifying for the div., and making a quick 15-16% in just a month. So why isn't everyone else doing this? What am I missing?
The only fallback I can think of is if the price dramatically drops on the 11th by more than $2, and I basically lose the money I made on the div. Anything else I should be aware of?
What do you mean by "demise" ? K-Swiss will remain an ongoing company, maybe with half its current annual sales revenues and half its current stock market cap, but the company will stay in business. I agree with you that the $2 dividend is a strategy which Steve Nichols is using to transfer some money out of the company and to his pocket. Legal. The public may participate, so it is ethical.
By "demise" I was being dramatic, but just really mean a significant drop in the share price. Just seems like a suspicious move in general, and I question the timing of it. Is there something they know about that will hurt the stock? Otherwise, why not use that cash to help grow the business organically? It seems foolish for a company to give up a big portion of their cash in this economic environment.