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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (33817)	3/17/2009 8:36:23 AM
From: E_K_S	Read Replies (1) of 78763

Hi Paul - I have been holding off on starting a position in the Lexington Realty Trust (LXP) preferred series based on this announcement. Lexington Realty Trust Announces Quarterly Dividend on Common Shares of $0.18 Per Share Payable 10% in Cash and 90% in Common Shares Monday March 16, 6:51 pm ET biz.yahoo.com It appears that this does not apply to their preferred series (so far) but it's still raises a red flag to me. There are too many other REITs that pose less risk looking forward 12-18 months. LXPpB, LXPpC & LXPpD are all trading at or near their lows. If I owned these, I would implement my hedging strategy by selling short the common, buy Puts on the common or exiting these preferreds and closing out my long position. ============================================================== As companies announce dividend cuts to preserve cash, a lot of potential value opportunities will be on sale. Specifically, I have been waiting for EI DuPont de Nemours & Co. (DD) to announce a cut (nothing so far) as it traded at a new multi year low last week. On any cut, I expect to be buying shares between $10/share and $15/share. The ace-in-the-hole is DD's solar division in China that comes with the deal. The patient investor will be well rewarded to snap up these value buys on any such news. Both dividend cuts and paying dividends with stock (SFL recently announced the option for shareholders to receive they dividend in stock) are indications that companies are short term cash poor. If the other value matrics look sound, it might be a good time to nibble. EKS

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