Flug bought another 10K on Monday ( up to141K shares) and director Samuel Katz reported buying 5K+ on Friday. and now owns 169K shares. The combination of these buys is a very healthy sign. The old adage that there are many reasons for selling a stock but only one reason for buying, has some truth to it. I bought more this morning at 6.715.
Of all the things that are relevant to amnf's performance going forward, the dollar is nowhere near the top of the list. The dollar has no effect whatsoever on about 93% of the business. Future success of the business will depend on growing the customer base in the United States, adding new products, possibly expanding the geographical area in which the company does business, reducing promotional expenses when prudent, etc. The Japanese business is a nice diversification, but not a major driver.
Amnf had a mildly disappointing quarter which looked worse than it really was because last year's Q3 was unusually strong due to special factors. To extrapolate from one quarter and say the growth rate has gone down substantially is to unreasonably jump to a conclusions without basis IMO.
Somebody obviously is selling. It could be for a variety of reasons, anything from having had a stop loss order that was triggered to needing funds for a margin call. I wish the stock had more liquidity but that's the way it has always been.
Amnf has been VERY good to me. I have 180K shares and it has made me a lot of money since 2005. For me, management has a lot in the bank, having done so well for so long. I have no reason to change my positive view based on some Japanese weakness with 6 or 7% of sales and some additional promotional expenses in Q3. The balance sheet is terrific, the yield at current levels is approaching 4%, the company will possibly be sold in the next two years and in the meantime has opportunity to grow. It continues to be a very attractive stock to own, especially at current levels.
I find it interesting that the .019 ex-div did not affect the large bidder at 2.20. I'm assuming it's the same person bidding as before. He wouldn't pay 2.21 yesterday and get the div, while happy to pay 2.20 today and not get it. Sure the market is up today, but amnf is generally not correlated to the indices.
I disagree that they would look at a larger dividend increase vs. a special as strictly a cost comparison. A special is 1-time and doesn't have to be repeated. Once you raise the dividend, you're pretty locked in at that level or higher.
If they wanted to "dial down" Q3 expectations, they would have added a statement that would have done so unequivocally. Raising the dividend but less than some thought was coming, is ambiguous so not the way to do it. As the posts here already show, there are many possible reasons for the .001 increase, other than that Q3 may be less than stellar. Interestingly, the market reaction to the announcement has been mildly positive.
It is impossible to know why they went to .019 . I doubt that Q3 will be weak given what they said in the Q2 Press Release at a time when they already had quite a bit of actual sales and visibility for Q3. Plus, the balance sheet is so strong, that unless the last few weeks convinced them that there was a permanent decline in the business, they could easily have gone to .02. In the very unlikely event that they saw a permanent decline, I think they would have kept the dividend at .018 and would probably have said something to warn shareholders.. So I don't buy that at all.
While we can only speculate, some possibilities for their decision:
1. They got a bit nervous about the recent sharp increase in market volatility and thought it prudent to be cautious. They can always raise again in Q4 or Q1 if circumstances make them feel better. If one Board member expressed that Mother's Day view, it could have easily convinced others to go along.
2. They are seriously considering an end-of-year special (as was suggested by unckle) and recognized that dividend increases are effectively permanent -- no company ever wants to lower the dividend -- and a special is one time and completely discretionary. Some board members may have thought that if they were to support a special, they wanted to be more conservative with the regular dividend increase (2.0 would have been an 11.1 % increase) as that would be the point of having a special.
3. They may have incurred higher costs than expected in finishing the new equipment and, though a 1-time event, thought it prudent to offset some of such increased cost with a lower dividend increase. This would not have a material effect on future results or the company's future.
For me, the company has performed admirably for many years (10 since I have been an investor) and they are entitled to the benefit of the doubt, unless and until they give a good reason otherwise. They haven't.
A dividend increase to .021 is justified.
There have been a series of .002 div increases and the easy call is for another .002 increase. But there is a good argument for a .003 increase:
1. The company had cash + CDs of 4.7M at the end of Q2, compared to less than 4.1M at the end of 2014. Presumably, a good amount of additional cash has been generated in Q3. Even with the cost of the new equipment, cash is likely to be much higher at the end of Q3 than it was at the end of last year. Unless there is an unknown (to me) need for cash beyond historical needs, the company is clearly in a position to pay .021.
2. Notes Payable and Long Term Debt has been reduced by over 180K from the end of 2014 to the end of Q2.
Thus, there has been an almost 800K improvement in the balance sheet (cash increase + debt reduction) in the first half of 2015.
3.. With the stock at 2.20, a .02 div would yield 3.6%. A .021 div would yield 3.8%. That is certainly not out of line for a growing consumer products company. BGS, for example, yields 3.8%. Of course, if the stock returns to or exceeds recent highs, the yield would be even lower. Moreover, Amnf historically yielded more than 4% during many years.
4. At 32M shares, the additional cost each quarter of a .003 increase in the dividend would be 96K a quarter, 32K for the incremental increase of .001 argued for here (assuming that a .002 increase is already expected). That is a small fraction of the increased cash plus debt reduction since the end of the year.
5. The stock has come off almost 10% from the high. While getting the stock higher would not justify a dividend that the company could not easily afford to pay, the company may feel, as many investors do, that the stock decline was not justified given terrific Q2 results and that a greater than expected dividend increase would have a salutary effect on the stock price.