Saturday, December 30, 2006
Kaiser Dividend Update
According to the OTCBB, KGHI's ex-div date was actually the 28th of December, which explains why it is trading down. Instead of reducing the spread between liquidation value and market value, Mr. Market has so far increased it. You could buy KGHI at $25 on friday. I couldn't (as I'm fully loaded), but you could. I'm hoping the spread stays wide as I decided to take some tax losses on my position and sold a small amount of shares. I'd like to get back in thirty one days from now (to avoid wash sales), and I'm going to be hating it if something magical happens.
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3 comments:
Randy - This is probably a stupid question/comment, but didn't the spread between stock price and liquidation value decrease? Before trading ex-dividend it was @ $30.50. Then it dropped by the $6 dividend to $24.50. Now it's trading at $25 so it went up 2%. Before the dividend the spread was approxamently 40-30.50 = $9.50. Post dividend the spread is now 34-25 = $9.
There is no such thing as a stupid question.
The spread is roughly the same on a dollar basis, but on a percentage basis it's actually higher. $30.50 was was trading at a discount of 23.75% of a liquidation value of $40. $25 is trading at a 26.5% discount to a liquidation value of $34.
So I view KGHI as cheaper now. For example, if they announced a $25 dividend, and KGHI started trading at one cent, despite it's remaining $9 in liquidation value, wouldn't you think that's a much better deal even if the spread hasn't shrunk?
Thanks, I understand now. I tried to buy shares today @ 25, but my order hasn't filled yet. Now I see the ask is @ 30 so I guess that means no one is selling or maybe the price is about to jump.
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