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NorthStar Realty Finance Corp. Message Board

  • dar200 dar200 May 14, 2014 5:22 PM Flag

    Ex-divi trading tomorrow

    I watch ex-divi trading on several stocks, in part because some of my flip buys are intended to "capture" a dividend with a short hold flip. Tomorrow NRF trades ex the 25 cent div for regular way trading.

    Sometimes, there is what I call the ex-divi dump. People (and tutes) hold for one last dividend and sell on the first day they can, the ex-dividend day. Pros know this is coming so the bid gets thin and drops fast. Sellers act like lemmings chasing a falling bid. The dump is more likely to happen when the price is near a 52-week high and/or there is a perception that future growth is done.

    Conversely, there is the ex-divi jump. People (and tutes) want in but don't want to buy a taxable dividend, so they buy on the ex-dividend date. The pros among the jumpers usually don't show their hand at the open. Rather, they wait for the dumpers to exhaust themselves and then strong buying begins.

    Since NRF is well off its 52-week high and the future looks so bright, my guess is more jumpers than dumpers tomorrow. If so, buy the morning selloff if you are looking to flip.

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