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TransDigm Group Incorporated Message Board

  • timothy.m.simon@gmail.com timothy.m.simon Jul 5, 2013 3:05 PM Flag

    Special Dividend

    Why hasn't the price shot much higher?

    This seems like a good deal?

    Sentiment: Buy

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    • How'd that work out Tim? Stock has dropped $20 so you only made $2/share. Not a very good return. If you are going after special dividends as a strategy, you need to invest in decent companies or get in before the price escalates on the news. This was a $140's before the announcement which included them taking on more debt to pay the dividend (never a good thing to borrow to pay shareholders-not true ROE). If a spec dividend is the only thing the company has going to make the price pop, it's always going to give it back.

      choices:
      1. sell it to take the net profit of $2 but you will get killed on taxes-the $8,800 is all reg income (non-qual div) and your S/T loss of $8,000 is capped at $3,000 unless you have other gains to offset it. So that $800 you netted is only about $600 on $63K. You are better daytrading CERE 5 cent swings.

      2. hold for 61 days to make the dividend qualified (taxed at 0%, 10% or 15%) and not reg tax rate and hope the stock goes back up to at least $151 for a $3,000 loss.

      I did this with OMX ($1.50 on $11.50) and GNRC ($5.00 on $40.00) and it has worked it well because OMX is merging with ODP so there was a company strategy for stock appreciation and shareholder S/T growth (stock has mostly rebounded to pre-div price) and GNRC is a great fundamental company which has nicely returned to pre-div price and only going higher. Holding both for 61 days. Both never gave back all the dividend in price loss except for Bernanke Taper day (which was a great buy day for me).

    • timothy.m.simon@gmail.com timothy.m.simon Jul 5, 2013 5:03 PM Flag

      Can someone please explain to me how this works?

      Let's say I bought 400 shares right now (@ $158) on 7/5. That is an investment of $63,200.

      From all that I can tell, that would qualify me for the dividend (at least 3 business days before the record date of 7/15).

      Can I sell on 7/16 or 7/26 and collect the dividend (of $8,800)?

 
TDG
284.72Aug 26 4:01 PMEDT