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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: Knighty Tin who wrote (17275)12/1/2004 11:06:34 AM
From: mishedlo  Read Replies (2) of 116555
 
From today's Rude Awakening.

The total sum that Microsoft will dispense to shareholders
is $32 billion. But Liquidity Trim Tabs estimates that only
$22 billion to $25 billion of this special dividend will
find its way back into the equity market.

"Institutions, which own 54% of Microsoft shares, are
likely to reinvest over 90% of their $17 billion
distribution," Trim Tabs calculates, "which means
institutions will reinvest about $16 billion in equities.
Assuming that two-thirds of the individual holdings of
Microsoft are held in taxable accounts, a 15% tax rate on
the $10 billion received by taxpaying individuals reduces
the $15 billion received by individuals to $13.5 billion.
At least half and perhaps as much as two-thirds of this
$13.5 billion, or $6.7 billion to $9.0 billion, is likely
to be reinvested in equities, since individuals have turned
bullish recently.

"The Microsoft special dividend will hit investors'
accounts on December 2," Trim Tabs continues, "but some
institutional investors could begin to spend the money a
few days earlier using existing cash or debt. Our best
guess is that between 25% and 33% of the reinvested $22
billion to $25 billion - between $5 billion and $8 billion
- will be reinvested during the first week of December. The
rest will probably flow into equities during the rest of
December."
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