Because there will be a 1 for 2 reverse split before the spin, the number of contracts you own will be half of what you have. At the spin, your option will be split.....same number of nrf and nsam contracts and strike price will be apportioned between nrf and nsam in the ratio of how they trade on spin date.
To illustrate, if you have 100 15s, you will have 50 on nrf and 50 on nsam at, say 18 + 12, if that is the ratio of trading prices. Your total strike price will add up to 30 which is 15 adjusted for the 1 for 2 reverse split.
I have the feeling you will make a ton of money on these calls. If you hold for more than one year, you get long gain on the sale. If you exercise at the strike, you get the bargain with no tax
Yes, you can withdraw securities from an IRA but that does not change the taxability. You are taxed on the fair market value of the securities. Fidelity used the closing price. I think they should have used the average of the high and low instead of the closing, but I pick my fights and this ain't one of them.
It was all done inside Fidelity where I already had a Roth. I created a new Roth online (to keep the conversion separate), then made a call and instructed them to transfer 3,000 shares of nrf from my regular IRA to the new Roth IRA and to take the transfer out of the lot I bought on 2/27. It was done within 15 minutes. Debit one account, credit the new account.
Suppose in the spring of 2015 after I have a good idea of what my agi and taxable income will be for 2014 I decide I want to pay 2014 tax on 1,000 of the nrf shares (now 500 nrf and 500 nsam). I simply create another new Roth account (Roth #3) and transfer to it only the shares I want to pay tax on. Then I simply revoke the Roth conversion on Roth #2, which thereby becomes a regular IRA. Since I don't need two regular IRAs at Fidelity, I instruct them to merge what was Roth 2 (now a regular IRA) into my big IRA. I then pay tax on what eventually ended up in Roth 3. Since I don't need two Roths at Fidelity, I instruct Fidelity to merge Roth 3 into Roth 1. It's all done over the phone within a few minutes.
BTW, I did it NOW with NRF because I expect the value will be much higher post spin. 3,000 NRF at 15.86 = 47,580 potential taxable income (or not at my election). Suppose in November the combined is worth 23 per share which = 69,000. I can pay tax on 47,580 to have 69,000 of tax free value in a Roth.....a no-brainer.
On the other hand, if I sell NRF and buy Tesla which is worth 12,000 in Sep 2015, I revoke the entire Roth conversion. Why pay tax on 47,580 to have 12,000 in a Roth? That's just stupid.
There are very few of these "pick and choose with hindsight" opportunities in the IRS code.
The exchangeable notes presented a problem with the spin......the price of nrf.....since the notes do not get spin shares. Yes, it was very expensive, as was retiring the other notes with shares at discount prices....truly dilutive, as reflected in estimated cad using 360 million shares as the divisor.
It's the price they paid for the deals they made.
I believe 100% of the 2014 dividends from NRF, both pre and post spin, will be tax deferred return of capital.
I expect only one dividend in Nov from NSAM, and that will be taxable as a qualified dividend since it will come from a C corp with taxable income.
2013 nrf taxable income was only a little better than 16% of preferred dividends paid, way short of any being taxable to common. I attribute this to increased depreciation coming from equity reit investments made in 2012 and 2013.
For 2014, we will have about a half year or a little more of depreciation on 1 billion of healthcare properties about to be acquired.
A half year of NSAM's taxable income will not be on NRF's 2014 consolidated tax return.
The tax loss on buying these exchangeable notes, financed with debt due in September will be about 308 million.
How the new debt gets refinanced, I don't know. I do know it will produce a huge loss, real and taxable.
Thus, I expect NO nrf 2014 dividends will be taxable, including preferred dividends. I expect they will have a net operating loss carryforward to 2015, but don't know how much. It should be disclosed in 10-K.
Maybe NRF will admit an expected tax loss for 2014 at a CC if asked. To date they have refused to estimate in advance the expected taxability of dividends.
So, I just transferred 3,000 shares of NRF to a brand new, otherwise empty, Roth IRA from my regular IRA. If I do not revoke the Roth conversion, in part or in full, I will pay a tax on today's NRF value. After I know what my taxable income will be for 2014, if it is too high, I just undo as much of the Roth conversion as I want AND I have until Oct 15, 2015 to make my decision.
So now I don't care if I won't know what the tax status of nrf dividends is until next Feb because I have the ability to choose how much, if any, of this Roth conversion I want to pay tax on in 2014.
Not me because I'd rather put more money in a company I know well.....NRF, SUI, SCCO...before I put more money into a company I am just starting to know. I bought the offering discount and the dividend on gut experience with other offering buys. Before I completely digest the 10-K and other filings, 2,000 shares is enough.
I don't think we get an offering until about two weeks before closing on the new healthcare properties. Press release on contract was 3/17 with no mention of closing timetable. Amended registration statement for new notes said closing expected in 2Q. Yeah, yeah, I know 2Q starts next week. But there are 80 properties here and the deal includes assumption of existing debt, which probably requires consent of the lender. I think end of April is earliest closing with first half of May more likely.
Since nrf had 546 million of unrestricted cash at 2/25, it does not need new offering cash until the new deal closes ( unless Hamo closed undisclosed deals in the interim).
I suspect today was a profit-taking panic once 16 did not hold as the floor. Too many trying to race the other guy to the door trying to "protect" profits before they run away.
NRF longs are spoiled with practically weekly price increases with new 52-week highs one after another since early December. Going up ain't a straight line as we were reminded today. Still, we have 15.58 plus a 25 cent div = 15.83 vs 13.45 at 12/31 (up 17.7%) and vs about 10.00 before spin announcement. We ain't doing bad despite today.
Tutes all mark to market, so selling not necessary to show profit on position, or earn fees.
To the contrary, winners are bought by tutes at end of Q to dress-up the end of Q balance sheet. It's called window dressing.
Gunna have to hold this one for a while, which is ok. I almost (not quite) always buy to flip that which I am willing to hold on fundamentals. My flip ratio on nrf is about 10 to 1. This is one of the 1s.
Yup, so much for 16 floor. Can't blame today on Yellen. This breaks momo and basing, imo. Nevertheless, I still think 17 before spin. May have to wait for more news, but I confident we'll get there.
Short interest was 32.2 million at 3/14 vs 40.8 million at 2/28. Short at 1/31 was 57.7 million so 25.5 million net cover since then......a decrease of 44%. I consider that surrender.
Loose with the words gets you killed on the witness stand. No, it's not semantics. Your point could have and should have been made without the word, "dilution" , which is irrelevant to your point, which I did not miss.
AI (Arlington Investment Management), a small mreit going ex div on 3/27 87.5 cents is off close to 5% on a stock offering. Offering price = 27.40. Any purchase price under 27.10 = bargain, imo.....quick flip or high yield.
I would not buy this before ex div in a taxable account, but just bought 2,000 shares in an IRA. My intention = dividend plus a flip. After I read 10-K and 10-Q I may decide to hold for yield.
While a little bit late, essentially right on schedule. 10 cents in a few minutes of near constant selling.
Shorts may not be as active or strong as they were, but they are still there and trying.
Fidelity is showing 32 million available to borrow.....no htb designation.
Agree on short activity lately measured by daily short volume percentage has been tepid compared to Jan-Feb.
Short interest report out after close today. This one will show the impact of those 282,000 March calls traded just before the ex date. I think these were exercised by shorts to cover. If the writers of those calls were covered, we should see a huge decrease in short interest. However, if the writers were naked and got assigned, they had to borrow shares to deliver on the call exercise. Then it substitutes one short interest for another, resulting in no net change. We'll see tonight.
Dilution is defined as a reduction in earnings per share caused by the issuance of new shares.
Dilutive (in a stock sense) is defined as the issuance of new shares which will cause a reduction in earnings per share.
The word dilutive or dilution cannot properly be used in connection with a new issuance without an analysis of the incremental earnings from the new capital compared to current earnings without the new capital.
Dilutive/ dilution are conclusion words. They presume a fact which is not in evidence.....the fact being the effect on earnings per share.
A dilution freak is an ignorant being who concludes an issuance of new stock will cause dilution and/or be dilutive without even considering the incremental impact on eps. That ignorance causes misuse of the words dilution/dilutive.
The same ignorance causes dilution freaks to equate issuance with dilution. That's why they call any new issuance dilutive/dilution without having a clue or given a thought as to whether or not the effect of the issuance will be dilutive, neutral or accretive.
Great week, closing at a 7-yr high. Fidelity reporting 16.31 close. Yahoo reporting 16.30 close with 16.31 immediate after hours. Makes no difference. Bid-ask was 24-25 at 3:50....then those willing to pay 30 stepped up.
Spent a decent amount of time trading 30 to 33, then drooling sellers chased bid back to 24 before selling stopped....or buying took over below 25. I think market is clearing out sellers between 30 and 35. Next stop is 40, imo, but I never know (or have a feel) for how many new shares will shake loose at a given new 52-week (actually 7-yr) high.
Other than the Yellen knee-jerk the whole week was consolidating and basing at over 16 with an upward bias. Now I feel that 16.25 is the floor and free trading will take place between 25 and 39 while the very high 30s may get some selling pushback.
Without doubt, the trading momo is up following the trend of organic growth. Just sit back and enjoy the ride with your core position.
Nope. NRF is the best growth story I own, but remember, I am a yield investor. My investment objective is to grow dividends by more than inflation. NRF has certainly done that. The price appreciation is very nice, but other than giving me more margin capacity, is irrelevant to me.
Wanna fast 2 to 4% with a safe hold if wrong? Buy BMY under 53.25. Going ex 36 cents in 10 days or so. Capture the div with a buck on top.