Well said - remember that several istitutional
investors have ponied up $100 million greenbacks for the
distinct priviledge of earning 12% over SEVEN years.
While, of course, corportations must meet bond
obligations before preferred and, lastly, common dividends -
there are plenty of people satisfied with adding a 12%
fixed income charmer to their portfolio with minimal
capital appreciation potential (unless interest rates
tank) and a fair amount of risk. But long term owners
of the common stock can receive 20% dividends (even
if dividends are cut by 40%, that would be a 12%
yield, like the bond!!) and still maintain the chance
for capital appreciation at some interval less than
SEVEN years! True long term owners will benefit as long
as the company functions reasonably well.
I'm with bucelli45 and erskind for two great
posts! The immediate question is about basing and
recovery, not putting PZN under the knife. erskind gives us
a laugh, and underneath a true comment on the
vagaries and mercurical nature of analysts. They might
just as easily decide PZN is an undervalued strong buy
if somebody steps up to the podium and says so.
newMK is right, let's look to December to see how the
current REIT status plays out.
I'm patient, long
and happy with my position (didn't buy at 40 though,
I must say). This past month is a small blip in the
life of this organization. One we'll remember, but not
the start of an era of "bankruptcy, no more dividend,
death of the company" as the chatter that I hear so
much on this board would portray it.
Ben Graham told a story 40 years ago that
illustrates why investment professionals behave as they do:
An oil prospector, moving to his heavenly reward,
was met by St. Peter with bad news. "You're qualified
for residence", said St. Peter, "but, as you can see,
the compound reserved for oil men is packed. There's
no way to squeeze you in." After thinking a moment,
the prospector cupped his hands and yelled, "Oil
discovered in hell." Immediately the gate to the compound
opened and all of the oil men marched out to head for
the nether regions. Impressed, St. Peter invited the
prospector to move in and make himself comfortable. The
prospector paused. "No," he said, "I think I will go along
with the rest of the boys. There might be some truth
to that rumor after all."
On covered calls, I have seen calls exercised
when they are trading slightly above strike to capture
dividend. Used to trade GTE, and on day before ex-div.,
sometimes had stock called even though bid was never lower
than 3/8 over strike.
I believe that the average time that a stock is
held by investors (institutional + retail investor) is
only 18 months. When analysts issue a Strong Buy or a
Buy recommendation I always wonder what is their time
frame - 6 months?..one year? A stock may be of mediocre
value one year out but may be a great investment three
years out. Five years seems to be an eternity in the
investment world and yet if a stock doubles in price over 5
years that's a 20% annual rate of return. Try holding a
stock for 5 years - I've never done it but I wished I
had on a number of stocks I've owned. So as I reflect
on what has happened to PZN over the past few weeks
I keep thinking about this time frame variable.
When great things are expected of a stock one year out
and things don't pan out, the stock gets clobbered
yet that same stock could be a great one to hold onto
for three or more years. I've also wondered what the
average holding time is for those individuals who post
messages here.....I tend to think that, on average, it is
quite a short period of time.....like I said earlier I
haven't been able to hold onto a stock longer than two
years....it's really hard to "stay the course" for up to five
years yet if you've picked a good stock you can get
amply rewarded and save on all those commission and
While technically the stock could get called at
any time before option expiration, I've NEVER seen it
happen 1) unless the stock is above the strike price
(obviously), and 2) until the day of expiration (3rd Fri)
Covered calls for me; I have no interest in being
short (naked) the calls.
One the one hand, the
best of both worlds... keep the div's and keep a
little premium too (call it an extra dividend, if you
But, giving away any dramatic upside.
my mind, stocks always come back slower than they go
down. The large div's would also adjust downward the
share price, helping keep it from getting called away.
The only open issue is if the call's strike price is
also adjusted down for big div's (similar to being
adjusted to reflect a stock split, etc)