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Corrections Corporation of America Message Board

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  • newMK newMK Apr 14, 1999 11:09 PM Flag

    Can somebody please explain?

    Jake 1349 summed up the dividend situation as
    succinctly as possible in #800.

    The reason there is a
    special dividend is that the new PZN is treated for tax
    and accounting purposes as if it were the old CCA,
    having acquired the old PZN.

    To be a REIT, new
    PZN can't have any of CCA's "earnings and profits".
    That's a tax term, but it is essentially retained
    earnings. Thus new PZN has to pay out old CCA's retained
    earnings by the end of this year in order to be a
    REIT.

    You have to be a shareholder of record when the
    special dividend is formally declared (as Jake said, .05
    per quarter through September, then about 1.85 in
    December).

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • You two are sure alot more help and quicker to
      respond than the IR of PZN. Thanks for the explanation.
      Do you think that we would see a drop in share price
      in proportion to the special dividend when it is
      paid out? Or might we see a surge in the stock price
      in the 4Q anticipating special dividend? Should I
      wait until 4Q to buy more or is there potential for
      appreciation before then?
      Thanks

      • 2 Replies to therealwarrenbuffett
      • I'm also reivensting my dividends but I'd be in
        no hurry to put in new money. Despite CRN's good
        relative showing, I'm convinced we have a bad Sector thing
        going on here and things have not yet bottommed out. (I
        once read that 90% of a stock's performance is
        determined by the sector it is in; I believe this more every
        day.) WHC's performance today and CPV's recent
        performance are leading us to a bottom but we aren't there
        yet.

      • just happened to be sitting here contemplating my
        well-offness.

        As I understand it (and as seemed to happen on March
        19), PZN will open lower on the day after the dividend
        record date by the amount of the dividend. Thus if PZN
        closes at $17.40 on December 19, and if that is the
        record date for a $2.40 dividend (special or otherwise),
        it will open on Dec 20 at $15.00.

        I guess in
        theory the dividends are priced into the value of the
        stock, so the price shouldn't go up much as the dividend
        approaches. Don't wait to buy just before the dividend - it
        won't work.

        Now, should the stock appreciate
        without regard to all this? Seems to me it should (I'm
        not selling, and am reinvesting the dividends as
        Flipper advised). When will it? I said a year ago that it
        could take a year to recover. It's just gone lower. But
        I truly believe it is undervalued. Just my opinion.

 
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