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Two Harbors Investment Corp. Message Board

  • yelyacs yelyacs Mar 20, 2013 6:12 PM Flag

    Question: expected price drop ex-DIV?

    the distribution of 0.32/sh in cash and ~0.0498 sh SBY/sh (calculated assuming all 57.5 m shares in the SO end up eligible for the special dividend) will correspondingly lower share price of TWO ex-DIV

    my question is, what is a realistic expectation of how the distributed shares of SBY SHOULD drop price, beyond just the 0.32/sh from the cash distribution? Is it just the share price of SBY the day prior ex-DIV, or does TWO carry the value of SBY shares on their books at some specific amount?

    I'll look through a recent filing see if I can find how TWO values its SBY shares but if someone better informed/experienced than me has an idea I'd appreciate it

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    • ok from TWO's annual report-

      "Silver Bay common stock ...[is] carried at fair value as a result of a fair value option election, with changes in fair value recorded in earnings. Fair value is determined based on the closing market price at period end"

      not sure how they define "period end " in the case of a special dividend but I'll just use SBY closing share price the day before ex-Div

      thus, using today's SBY closing price of 19.15 to estimate the SBY portion, I expect the total (cash + shares) distribution valued at ~$1.27 and TWO share price to drop by that same amount ex-DIV

      so look for share price to close in the 12's ex-DIV

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