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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (10428)	4/26/2000 9:11:00 AM
From: Grommit	Read Replies (2) of 78498

thank you for ECIL. new topic - F. Ford -- maybe we should kick it around here. I wonder what the implications of their recently announce $20 per share special dividend are? Stock at $55. EPS around $6. Dividend $2. Div yield 3.6%. after the $20 dividend -- (a) Stock drops to $35 theoretically perhaps. (b) EPS drops a bit due to less interest earned -- let's say 10% of $20 = $2 per share lower. But after tax, that reduction might be $1.50 or so. EPS now at $4.00-$4.50. (c) Regular Dividend remains at $2. Yield = $2/$35 = 5.7% If this occurs, I would think that the yield might attract a crowd. So perhaps the price does not drop by the same amount of the special dividend. Opportunity? Just thinking, (and buying) grommit DELIVERING SHAREHOLDER VALUE: On April 14, Ford Motor Company also announced a Shareholder Value Enhancement Plan that offers Ford shareholders new Ford shares and a choice of accepting $20 per share in cash or additional new Ford shares equivalent to the cash value. ``This plan reflects our transformational thinking,'' Nasser said, ``as well as our strong earnings and cash flow. It also underscores management's confidence and our commitment to delivering superior shareholder value over time.''

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