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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (33817)	3/17/2009 12:03:24 AM
From: Spekulatius	Respond to of 78762

Paul, i do not believe that REITs can distribute preferred dividends in stock. Anyways, how would that work? Would preferred shareholders get more preferred stock? At what price? If it is the current price of the preferred they would issue more debt (from a shareholders perspective, preferred are debt) at extremely high interest rates? That would not make any sense. Just another bad datapoint regarding REITs. CS (accessible for those with E*Trade account) just issued a new report and lowered the NAV of my favorite (LOL) REIT KIM from 30$ to 10$/share (10$=10% cap rates). Citigroups estimate is still at around 20$, I believe. I guess one can pick your own value. Mine is between 20$ and zero.

To: Paul Senior who wrote (33817)	3/17/2009 12:56:47 AM
From: Grommit	Read Replies (2) \| Respond to of 78762

You can think of a stock dividend as a combination cash dividend and a mandatory rights offering. They can make you buy the shares but they cannot make you keep them. You can sell the dividend shares and you will then have the dividend in cash. The only issue is that as a stockholder, you may not want to see a rights offering at today's stock prices. If you feel that way, you have to keep the shares and sell something else to get your "cash dividend". Does this make sense?

To: Paul Senior who wrote (33817)	3/17/2009 8:36:23 AM
From: E_K_S	Read Replies (1) \| Respond to of 78762

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