To: Lee who wrote (16416 ) 1/15/1998 3:45:00 PM From: Lazlo Pierce Read Replies (1) | Respond to
from briefing.com VERY INTERESTING <<CHEROKEE INC. (CHKE) 14 3/4 unch. This one requires careful review and the situation is unclear. On December 23, 1997, Cherokee put out a press release that said Cherokee "announced that it has declared a cash distribution...of $5.50 per share on its common stock, payable at or shortly after Jan. 15, 1998. The company will pay the distribution to stockholders of record as of the close of business on Jan. 2." Seems straightforward enough. The price of the stock spiked in heavy volume after the announcement from under 13 1/3 to over 17. Then, in early January the stock backed off, as would be expected after an ex-dividend date. Now the weird part. It appears that the Nasdaq has a rule (11140b) that says any company making a dividend in excess of 25% of the stock price must have the ex-dividend date the day after the payable date. This appears to apply and, the ex-dividend date may therefore be tomorrow, and shareholders of record as of today get the dividend. This would mean that shareholders that sold the stock since the presumed record date won't get the dividend they expect. Briefing called the person who put out the press release, and she said, rather obliquely, that it was her understanding that the Nasdaq rules apply, and that the record date is today, not January 2. Cherokee has not put out any press release to provide clarification. There are only a couple of hours left in trading today, and Briefing is not drawing any conclusions from this murky situation. To complicate matters, Cherokee reported excellent earnings yesterday of $0.49 a share, up from year ago $0.28 a share. This stock has been very volatile over the years. Cherokee licenses brand products such as Cherokee, Sideout, King of the Beach, and Pacific Express but has no product sales. It therefore generates cash from license deals, and when a big one came in recently, CHKE decided on the large dividend. This is a curious one to watch, but anyone interested should do independent research.
