The whole, DUK, and the parts, DUK-WI and SE-WI, are down again.
Is anybody concerned? (CIC says he already bailed.)
I was considering watching SE for a buying opportunity. Somebody, please, stop me if I'm wrong!
You need to do the Math:
If you had 1000 shares of Duke right now you would have 1000 times 33.07 or $33,070.
Duke when issued is 19.08 right now.
Spectra when issuesd is 28.25 right now.
If the Spin-off happened today then you would have:
1000 shares of Duke times 19.08 or $18,080 and
500 shares of Spectra at 28.25 or $14,125.
The total here is $32,205 so the difference is $865.00.The W.I. is folling the Price of Duke and valuing it based on the two final entities.It is hard to estimate fair value for Spectra as there are no Financials etc.It appears that more value is being placed on Spectra by Investors/Speculators. This is contrary to what Analysts in Barrons etc had estimated with a Price of Duke at 22 and Spectra at 14 or 15.
One thing that stands out art this time would be the Dividend/Interest.We know that the dividend is going to be $.84 on Duke.The reason it is $.88 on Spectra is that when you take the .84 on Duke then you have the difference between that and $1.28 to be $.44 and since you get 1 share of Spectra for every 2 shares of Duke then you need to double the $.44 so you get $.88 for Spectra.
At a price of $19.08 for Duke when issued and a $.84 dividend then you have a dividend rate of 4.4% and for Duke right now you have a dividend rate of 3.8% and 3.5% for Spectra.Again its hard to say what is going on with Spectra as there is no Financial information,however it would seem to me since all other things I have read value Duke at 22 and its when issued is at a lower percentage that Duke will rise a little from this 19.08
This is just an estimation based on the above but you can only guess as there is no means to judge the value of Spectra without all the info.Meanwhile if the Price of DUK-does not rise between the time of purchase of Duk-WI and the dividend date then there is 4.4% on your money.I certainly would buy only the W-I as I suspect that the price of Duke now is slipping because of Tax write-off and the feeling of Investors that it needs to drop to its true value after the Spin-Off as it will cease to exist.There is also going to be the fact that who will pay $33.00 for a Company that is going to sell for 19-22 in a few weeks?
Thanks to you (and the others) for your informed (and non-condescending) reply to my rookie-ish question.
Your examples are curiously appropriate [for me] as my minor position is exactly 1k shares w/ an average cost of 27.167
>>There is also going to be the fact that who will pay $33.00 for a Company that is going to sell for 19-22 in a few weeks?<<
As of noon (Central) a volume of [almost] 1.6 mil with a gain of [almost] .2% 'seems' to indicate that those shares are inclusive of the "when issued". I 'think that would explain the "pay $33.00 . . .19-22"
Minor math error there with your DUK-WI calculation.
At the share prices you quoted the values of DUK-WI is $19,080 and SE-WI is $14,125 for a combined value of $33,205. Which is $135 ahead of the value of the hypothetical 1000 DUK shares.
My tracking shows that since DUK-WI and SE-WI started trading last Thursday they have consistently been worth more that DUK alone.
Beyond this observation I have no clue what's going on here or how many -WI shares are in play. Any thoughts on whether the -WI share prices reflect true market valuation or is this being managed somehow thru the split date?
i did listen to recent road shows of both se and duk. in my opinion, for what its worth, they were both positive.
until i see some bad news, i will add shares of both stocks on dips. i dont mind dips in these stocks as im in for the long term. there will be along term price appriciation and with there dividend se and duk is a good value. imho
Your phrase, "long term" is relevant to my perspective. I'm looking for a dip/reason to add weight to the SE side. I am just leery of buying SE before the actual distribution.
(I can cite no logical reason for my (excess?)caution other than my lack of knowledge/experience.)
I would hold until we see how this all plays out January 1st. I saw allot of major buys into Duke before the 18th. If I were going to see Duke I would definitely go with SE. You will not find a better group of management than Anderson's. He is going with SE which is a flag. Until I see exactly how this is going to play out, I am long. There may be another twist in regard to Duke after the 1st quarter in regard to a pipe line.