Highfields: DLR can go to $19/share, will cut dividend
At the Ira Sohn Investment conference in May, Highfields' Chief Executive Jonathon Jacobson unveiled a short position against Digital Realty Trust saying its stock price could drop as low as $19 a share.
Jacobson, who rarely discusses short positions by name, said Digital Realty Trust, or DRT, would not only have to battle more with Google, Microsoft and Amazon, which all have their own data centers, but also face higher spending.
Jacobson said the dividend payments set at 78 cents a common share in March, June and September and kept there for a payout in December are unsustainably high.
The payout ratio is something like 70%--that is excellent. Who are you trying to kid? And the insiders were BUYING, not selling. The stock is a risk because of short-sellers who don't mind lying and planting false information.
I posted on another thread on this board that the buy back is only "authorized". From the tone of the conference call, the buy back is not the first priority whatsoever. There are more pressing needs for the company's use of capital, and most capital will need to come from some form of financing.
As to what Highfields is saying, that seems a pretty far fetched proposition, div coverage based on FFO is fine, even with lowered guidance. The guy is speaking what he wants to promote his own agenda.
Not defending DLR management at all, they have done little to impress me, both in execution and PR skills.
However, I continue to hold DLR, a 15% tanking seems overdone.