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Non-Tech : SWS - An undiscovered gem
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To: Frank Drumond who wrote (230)5/20/1999 1:10:00 PM
From: jbe  Read Replies (2) of 504
 
....I sure would like the dividend. Look at it as protection against a 10% drop AND a reward for holding for another 6 weeks.

I don't get it. According to a poster whose opinion I greatly respect (Chuzzlewit), this "dividend" is really just an ordinary stock split. Here is his response to a question I posed to him when the 10% stock "dividend" was announced:

This is not a dividend at all, but a stock split. It does not create value, nor does it put cash in the hands of shareholders. The following simple example should illustrate this. Suppose the company were worth $100MM before the "stock dividend". Its value ought to be worth $100 MM after because the business has not changed --only the number of pieces of paper. So you could expect the price of the stock to drop by around 9.1% to compensate for the additional shares. In other words there is no change.

Message 9387692


I get the impression that you regard the dividend as a protection against a 10% drop that might occur anyway; Chuzzlewit expects the dividend to cause the drop. Do I have that right? Enlighten me, please.

(Personally, I don't want to sell either. This stock has appreciated more than 200% since I bought it earlier this year; first time that's ever happened to any stock I've owned!)

jbe
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