Even so, doesn't it seem clear that if the price of oil remains in this vicinity, that LINE must lower the dividend? If not, what do you see that might allow them to maintain it or raise it?
You should probably take into account the conversion rights. There is a mandatory conversion into the common stock in Feb 2016. With the common at this price, the conversion rights are an important factor.
I missed this 8-k. You may be right in your interpretation. There are some other qualifications that will take me a while to study to see if the are still problems. Even so, I can easily imagine that taking over a new company they may be a little cautious about rushing to pay a dividend that they can defer until the end of the year.
Overall, I am still optimistic about CWH and did not mean to suggest that they would be unable to pay a dividend; only that it might be delayed for a little while.
I think that this point has been made previously by others on this board: a change of control is an event of default under CWH covenants. To proceed to pay dividends, first they must repair the default. To do that needs either waivers from creditors, replacement of the creditors or perhaps payment of some of the debt. It looks to me that the new management is trying to generate some liquidity to be able to settle with the creditors.
I don't understand fully why Yahoo shows (under historical Prices) a dividend of 0.0 for April. It also appears that the stock is up, substantially, despite the report of a net loss. Any comments?
Does anyone know the basic facts about this Cellcube? That is, what does it cost, what is the size, weight and power storage capacity and what is the durability and reliability?
Well, yes, but perhaps you should also seek tax advice. I think I remember that once all of your capital has been returned (for retirees that might not happen) you may need to pay some tax on each part of the dividend. Exactly how moving the shares from a deferred account to a taxable account may affect your tax is another point to consult with an expert.
I don't necessarily disagree. It would look bad if they were unable to conceal what they did. It might be a little expensive (more so if the price of the stock starts to drop, before they act), but RMR also has a lot to lose. Increasing the price of the stock (the likely be the result of an attempt to increase their share of stock) will also be expensive, but would tend to lower the price of puts.
More basically, CWH is a fairly small pond and vigorous action in a big way is bound to muddy the water.
They could protect themselves in a variety of ways if they chose this strategy. The simplest (but perhaps not the cheapest or best for the other stockholders) would to be to purchase a put when they bought the stock they think they need to defeat the vote.
According to the latest quarterly report:
"At October 31, 2013, the Fund had outstanding borrowings of $861,800,000. The interest rate applicable to the borrowing on October 31, 2013 was 1.09%."
So, yes, there is a form of hedging; they use some leverage. Even so, they have also bought back their preferred shares.
Over the years they have typically not fully earned the dividend and paid some of the dividend as capital gain. Even so, it does appear that the book value has been increasing. If you look back at their record of paying dividends, it is clearly an excellent one (I've been following it for quite a whiiile).
It is an interesting analysis that leads you to think of buying back common shares. I suppose that if they buy back enough you think that they might then raise the dividend.
It may be so, but a better strategy might be to buy back preferred shares, since they pay dividends at a higher rate than the common. Consequently, the same money spent on preferred shares would mean even more cash next quarter for dividends,
We can all hope so, but any complicated administrative procedure where the interests of the parties differ is bound to be a bit risky and uncertain.
Its a good idea to keep in mind that dividends seem to be paid twice a year (at least that was true in the past). So, in between, there is a tendency for the price to be weak. Even so, it is a big strong business (at least insofar as a European entity can be).
You, in one respect, seem to damn them with faint praise. My earliest record for them is of dividends starting in 1987. Through the '90s they paid their dividend regularly and it amounted to between $0.71 to 0.79 per year.
The question of current interest is a combination of use of leverage and a dividend that is not fully supported by earnings. Over the last few years, the company does not depend as much on electric utilities and that would seem to be the reason for some dividends being capital gains.
By any measure it has been a dependable investment company. There have, over the years, been times where it could be bought below 8 and other times when it could be sold above 10.