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Templeton Russia and East Europ Message Board

  • jerryrivers jerryrivers Aug 5, 2009 2:34 AM Flag

    How a $9 "dividend" will make the Premium to go all the way up to 175% overnight

    NAV is currently $13. If "dividend" (distribution plus long-term and short-term capital gains) is $9, the NAV will drop to $4. Now the share price is $20 (after a $9 dividend, the share price would drop by a corresponding $9, but actually it would probably drop $9 plus 55%, or $13.95).

    If the share price dropped only to $11, the premium would be $7 (175% of $4). But in all actuality the share price would probably drop to $6.05 (which would still be a 55% Premium).

    Anyways, I don't expect this ridiculous Premium to last until December, but this in direct opposition to the morons who say people will bid the Premium up into the stratosphere again by buying TRF for the "dividend" (when only about $0.25 of the $9 "dividend" was actually a distribution of dividends -- over $8.75 was from LT and ST capital gains, which are only good for increasing the amount of taxes you have to pay to your Uncle Sam and your state in April).

    TRF's Premium is currently in what could be mildly called a bear market rally. It hit 100%, dropped to 45%, hit 75%, dropped to 45%, hit 70%, dropped to 50%, and now it's at 55%.

    TRF Premium may go up a little bit short-term from here (maybe to 60-65%), but I expect it will be in the 30's by September.