This page is set up for those that want to chat about various common stocks.
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3/31/2025
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FWIW, I opened starter positions in DHI and LEN on Monday, they’re both up 5-6% in a few days; I’m torn betw adding and taking a quick profit. My guess is the softening 10-yr may stimulate new mortgages and both firms, from what I’ve gathered, are behemoths in the industry. No recommendations.
Picked up some DVN (Devon Energy) this morning. Ever rising dividend, Special divs on top of that plus consistent stock buybacks. Happy to get it at these levels, thought it got away from us there in last few months.
Pig, I think it was Private that mentioned this gas pipeline company and that it’s not a MLP. I keep it on watch and it hit a low today OKE. But I didn’t have a bid out so missed it. Think it would be a good buy under 90
Charles, Yes no K-1 for OKE. I have owned and sold that one a few times. Always on my watchlist.
I’ve been watching crude futures for a long time. Since the 63.64 low in March 2023, price has rallied and fallen three times with lower highs and lower lows above the 2023 low.
There might be another lower low coming. Down 3+% at this time today. Will the 2023 low be tested? I have projection targets near 60, which are more suggestions than predictions.
I bought AMZA near the 2020 low. My YOC is 14% now. Ever since then I’ve been looking for the opportunity to buy another solid dividend payer at a deep discount. I hope it doesn’t take another recession. Watching and waiting.
Not a recommendation and they are likely going to get hurt in the short term but I have been quite excited buying up CAT at these lower prices. Just an idea for consideration.
Yield Hunter, You might want to look at HY also. I wouldn’t buy at these prices yet seeing we are still far from a 10yr low.
Thank you for the idea. I’m looking high and low for some new issues to study. I do miss the obscure ones like Grid would dig up. I have found a few. Gotta get the illiquid threads going again.
Yield Hunter, I still hold a few and have a couple old orders sitting out there that I wouldn’t mind if they hit. But Fidelity has made it hard to buy and sell illiquids. So not as much interest as I used to have.
Refineries / tariff burdens are a current hot topic. A selective list of US refiners that use tariffed crude. Cut and paste from a news story, so DYODD
uses crude from Canada –
Marathon Petroleum (MPC),
Phillips 66 (PSX)
HF Sinclair (DINO)
PBF Energy (PBF)
uses crude from Mexico –
Valero (VLO)
PBF, Phillips 66, and Marathon.
In addition to tariffs, large port and service fees have been proposed for Chinese vessels docking at US ports. (Many vessels are Chinese.) These large fees could increase costs for refineries hoping to replace pipeline crude with tanker crude. JMO.
After briefly studying past dividends, it looks to me like the KRP dividend yield is 10-11% on average regardless of price. If oil stocks are entering a correction (I have no idea how likely), I’d expect the KRP dividend to fall along with the stock price. OTOH, I’d feel confident that the dividend would remain roughly proportional to price and not die.
Azure explained the tax benefits of owning KRP for high bracket folks, so I didn’t pay much attention.
KRP sharp knife
So Rocks, At what price did you try catching it at?
Charles-
I bought none on Tuesday. Might buy a little if it goes lower, though today looked like a good price at the low.
On the one hand OPEC is going to gradually increase production, and on the other tariffs will affect Canadian crude imports. Currently, crude futures are showing a few dollars of backwardation. Crude futures are sitting just below uptrend support. What it all adds up to I have no clue.
R2S Always a love hate relationship with oil. Azure blue mentioned awhile ago to watch refiners, but when I read other parts of the country are paying less than $3.00 a gallon for petrol it tells me the refiner margins are narrow then add on top of that the tariffs and it gets even narrower. KRP is producing more gas than oil right now similar to the direction DMLP has gone but we are coming out of the season for major draw down on gas reserves and will be going into the season where they build those reserves back up.
What it all means I don’t know either.
I do own some KRP below $14.
For anyone interested in KRP it’s conference call is here:
https://finance.yahoo.com/news/q4-2024-kimbell-royalty-partners-090009787.html
Is this something that has any tax considerations for holding in a taxable vs an IRA?
Irish, they have elected to pay taxes as a partnership and not as a MLP. More like a Reit
Crude futures are trading below the Sep uptrend. XOP -3.5% and approaching the Sep and Dec lows. Serious or temporary? Dunno.
Here’s something I know. KRP ex-div for 40 cents on March 18. Not much, but something.
The RSI on KRP touched 30. As much as I dislike what the KRP board and management have done to shareholders, it does seem to be somewhat cheap at the momemt.
My thoughts on KRP, please understand that I own >10k shares and this is one of my top 5 holdings and is a core position in that I have no plans to sell anytime soon. I own it for exposure to oil/gas prices:
1. I believe it is cheap now, with the 40c div upcoming you can buy this net <14 $/sh.
2. Management does seem to know the business very well and I trust them to make quality acquisitions. I, of course, know nothing about the oil business so this is mostly my feel.
3. As with all stock investments, I am along for the ride. I do believe management looks to grow the asset base as it benefits them and secondarily benefits common shareholders.
4. the last stock sale at 14.90 didn't bother me much. They were looking to sell 10% of the company in one shot – you can expect a decent discount for that type of trade. Particularly for a small company with limited share volume.
5. the preferred sale in last year bothered me more as it gave guaranteed returns of up to 16% IIRC to the holders. Again depending on how they chose to work this it may have been the best available. Like the stock sale, perhaps a different manner or timing to get the funds would have proved less costly. However as I wasn't involved with either fund raising effort, that is my conjecture.
6. the SPAC was a mystery to me. Never understood the reason they did this or how it may have helped KRP common. Cynical me believed the reason was for management to make a pile of cash as that seemed to be the reason for all SPACs.
All of the above said, I added to my position today at $14.5 as at 1.6 $/sh payment, it pays 11% tax deferred (which is especially helpful for my situation). Should it go under 14 before the ex-date, I will add more.
Thank you for your insight, Zarely. I agree KRP appears attractive and yes, I would certainly defer to the management and board on expertise in the oil and gas industry. On the flip side, there are the shareholders and the share price, of which it does not appear that they are managing nearly as well. As a matter of fact, I’d say they are managing those two rather poorly. Further, the insiders have large holdings and options, so it is very difficult to understand why they would do such things to hurt themselves. I guess time will tell if this will all works out or not.
For those that don’t know technical analysis terms, RSI is Relative Strength Index measuring price momentum. A reading of 30 or below indicates an oversold condition for KRP.
Rocks, Now that there has been some questioning in the news about the government reports being put out and it looks like revised downward the futures are just indicating there is going to be a slowdown in oil demand so prices are dropping.
Nat gas is up 8%, which will benefit KRP.
Oil prices dropped today because OPEC is increasing output for the next 18 months. US is looking to lower gas prices by boosting domestic production, 3-3-3 plan. Tariffs, Russia wild cards. I think oil prices stay weak. JMO. DYODD
Oil Stocks Fall Hard After OPEC Move to Boost Production
https://www.barrons.com/articles/opec-news-oil-prices-exxon-1feb7ea6
This link was posted over on SA at midnight by an overseas follower in the comments section.
https://immunitybio.com/immunitybio-receives-fda-rmat-designation-for-anktiva-and-car-nk-for-the-reversal-of-lymphopenia-in-patients-receiving-standard-of-care-chemotherapy-radiotherapy-and-in-treatment-of-multiply-rel/
Stupid me, I don’t have the website for this company on Google watch for new news. ( not computer adept)
I hope this calms Westie’s nerve’s. You could make some coin for a quick one day flip or hold for the quarterly report.
BTW this is what got me started watching this company 2yrs ago was their work on Pancreatic cancer.
In a nutshell, instead of trying to go directly after approval for a drug to treat pancreatic cancer which would be a tough sell, they went for cancer of the outer lining of the bladder and won approval. Then they started working on small cell cancer of the lungs. If this alternate use is approved then doctors can use it to treat pancreatic cancer even though the original approval was for bladder cancer.
CM, IBRX up over 9% today. Nice buy.
Dan, sold my higher priced tranche today for a couple cents profit. This is not a qtr. mile horse race, more like the Grand National. I am hoping to replace it at a lower cost. See if I made an error in judgement.
RILY has now shown up 2 days in a row on my price jumps screener, today alone +22% on news they paid off Nomura’s Loan w/ $160mm financing from Oaktree.
As of two weeks ago, 9mm shares were borrowed. Going to still see allot of forced buying here from shorts.
Never expected to see RILY up over 90% in 5 days!!!
RILYN up 20% today. RILYM up over $25 even though it matures tomorrow.
I did OK with my RILYM investment but never expect what has happened in the last few days.
This one has the potential to be a blunder. But I decided to take advantage of the angst this morning on a fledgling Pharma company GERN (Geron Corp). Put out a 10% of normal position at $1.57 which I think at time of purchase was 33% below yesterday’s close. Will buy some more at increments lower for sure. My history with this company goes back a ways and reads like a Taylor Sheridan drama. It seems to be the cockroach of oncology pharma as it lives thru whatever calamity gets thrown at it.
PP – Probably saying something you already know, but the obvious strategy on one of these types of companies is don’t overstay your welcome. Back in my working days, I had the opportunity to invest at the venture capital level along side my firm’s venture capital arm. They had their share of these types of companies going thru the different phases of testing… Some were grossly successful after they went public but my memory was of how so many failed at the Phase 3 level and were severely punished or ultimately went under because of it… So when the opportunity comes, take the big profit if/when it happens and move on to the next…..
BTW, I know absolutely nothing about this company so thanks for bringing it up. I did get a kick out of one statement they made, though: “We expect to reach profitability without additional financing if our current internal sales and operating expense expectations are met.” Gee, really??? That’s a good observation that practically nobody would have thought if they hadn’t brought it up.. LOL… Yes I realize it has to do with saying they hope not to need any more financing but it sounded kind of naive… Of course you do..
I hope this doesn’t qualify as one of those posts you might think deserves a “mute button.”
2WR, Very sound advice!!!
PP thanks for posting. Always interested in another lead on a pharm stock.
The one I mentioned yesterday, been following it for years. Also agree with 2WR I trade more than a long term hold with these companies.
BTY I always appreciate your posts please keep hanging around.
Yes long term hold = death for 99% of these things. I put any bio stocks that I hear about from people in a watch list to investigate. Jim mentioned an interesting one yesterday also. ESPR (Esperion Therapeutics) has been a thorn in my side for years. Thought for sure that one would rise up. Counter to that is AUPH (Aurinia Pharmaceuticals), a Canadian company that has somehow managed to make back some decent money. I’ve been in that for awhile, below $2/share. So you can see where that went, and now fallen back to. GERN has been a dramatic wash over the years, at first huge gains, then falling back down after J&J ditched them. Currently with much hype for another resurgence. Overall, somewhat profitable, at times total busts, at other times magnificent gains. Its a rollercoaster.
Pig am I allowed to giggle?
AUPH is another of my trades I made money on. Follow Joel Menkes?
He is over on SA. We bump into each other following the same thing, but he does options which I will not do.
Endless biotech stories. A CFO I know had millions in stock options from his company. Bankruptcy resulted in $0 value.
GERN down 31% today.
I was down 60% in PGEN. When the price went to $1.12 and there was news of a possible product they could sell, I made a new risk purchase. That January purchase is up 60% and my total capital lose is now $0. Could be a big winner or loser going forward. It’s like playing in Las Vegas.
Pig pile and Dan here’s another one I find interesting. Just watching for now. Two reasons, good and the bad
The illness they are working on good, bad is they are not looking at when the illness has progressed so limiting the patients pool. Maybe smart that if it works on less serious form then they can see if it helps with the more serious illness.
Good, it seems to have promise. The bad, the trial was so small (13 patients) doesn’t confirm it really works so they have to re-do it with a larger group and spend more money. Good they just did an ATM of stock so at present burn rate they have enough cash to last to 2027 the bad, they will need to ramp up spending to do a larger trial study and they are not even at a phase 3 yet. Probably why the the stock cratered yesterday. Again, just watching CADL
Personality I only play with one at a time. Too easy to get wacked like yesterday.
Excuse my grammar, I’m obviously trying to post using my cell phone.
I don’t normally post my moves when I am trying to take a position, but there is some great people on here who have shared what they are doing with the caveat DYODD ( do your own due diligence) don’t just follow them blindly.
This is not about income. This is about trading.
There are people who follow energy, others who do tech, and others who trade MREIT’s.
This is bio-tech. I closed out my last position too early but still made money. I just re-opened a position in IBRX and fully expect I may be playing with fire and getting my fingers burned. In this case, I am hoping it falls lower so I can buy additional tranches. I expect the next quarter’s report will still show a continuing loss. I don’t play options, only the numbers and red or black.
Chas ….. until your post, knew nothing on the company. I’m a Barrons subscriber, and noticed a October 24, 2024 article that was positive on company. Article written by Elsa Ohlen.
If you can’t access, I can attempt a paste and send back.
Jim
Thanks Jim, That would be nice.
This Biotech Stock Could Rocket 800%, Analyst Says
By
Elsa Ohlen
Updated Oct 24, 2024, 10:48 am EDT / Original Oct 24, 2024, 9:50 am EDT
ImmunityBio is a California-based biotech company with its lead product—Anktiva—showing promising results for patients with bladder cancer.
It can be hard to astonish analysts, especially those who have been in the business for a long time. Yet, one analyst told Barron’s that “rarely in my 20 years as an analyst have I seen a company with so much potential.” He was talking about the biotechnology company ImmunityBio.
EF Hutton analyst Jason Kolbert initiated coverage of ImmunityBio stock with a Buy rating and a $30 price target on Wednesday. That implies a startling 767% upside to its current share price of $3.46.
ImmunityBio is a San Diego, Calif.-based late-stage clinical biotech poised to revolutionize cancer immunotherapy, according to Kolbert.
The company’s lead product Anktiva works by activating the body’s natural immune system to eliminate tumor cells and provide long-term immune memory against cancer. It was approved by the Food and Drug Administration in April this year for adult patients with a cancer unresponsive to the most common intravesical immunotherapy (BCG), non-muscle invasive bladder cancer.
Anktiva’s ability to convert cold tumors into hot ones—making them more responsive to immune attack—is particularly effective as cold tumors typically evade detection, Kolbert noted. This can potentially improve outcomes in various cancers, including those traditionally treated with checkpoint inhibitors, such as melanoma, lung, ovarian, and colorectal cancers, by making them more vulnerable to an immune system attack, he added.
The small-cap company has a market value of $2.8 billion, and has yet to report a quarterly profit since its listing on Nasdaq in March 2021, which isn’t uncommon for start-up biotechs.
The stock rose 8.7% to $3.76 Thursday. At Wednesday’s close, the stock was down 31% for the year.
ImmunityBio isn’t the only company focused on developing novel cancer treatments. Another small biotech, Summit Therapeutics, said in September its cancer drug Ivonescimab outperformed leading cancer drug Keytruda from Merck in a head-to-head trial.
Both Keytruda and Anktiva are types of immunotherapy and Ivonescimab is an antibody treatment.
Write to Elsa Ohlen at elsa.ohlen@barrons.com
…… sorry about delay ,away from machine this morning …
I’m going to run this by my new neighbor who invented many of the cancer tests in use..
I admit it sounds like a puff piece and I don’t really trust Barron’s for much.It’s not as bad as FT Alphaville blog, which is used to manipulate stocks withg BS takeover talk.
There are over 2000 biotech companies in the US. Hard to find the good ones. I’ve been waiting 3 yrs for the small one I bought to have some success. It sounded good when I bought in 2021.
danzeb, I really shouldn’t comment, BUT I am well into 7 figures in both RXRX and GRAL. RXRX has an incredible amount of investors we have all heard of: $50MM from NVDA (yes, that NVIDIA Corporation), Ark Investments, SoftBank, Novo Holdings, Vanguard, Blackrock, Mubadala Investment Co PJSC, State Street, Baillie Gifford and Company etc etc and still I would tell you it’s just a speculation in my portfolio. As for GRAL; https://grail.com/ my son in his last semester of Dental School had a patient last year that was an Oncologist and was raving about being one of the physicians on their initial clinical trials. I met with management and have done all the due diligence I could https://finance.yahoo.com/news/why-grail-gral-stock-jumping-175048673.html AGAIN, it’s just a speculation. What’s life without a bit of mystery
I am Azure and of course these are NOT RECOMMENDATIONS so no wagering at home…
Ab, only play with money you can afford to lose. Sounds like you’re in good company but a crowded room.
Thanks Jim, When I’m in the office a couple days a week I don’t have III up on my screen and a lot of posts spool off when I’m not watching.
Just to be clear, I think we are in the next great evolution of modern medicine. Probably AI will help move it on ( I dislike that acronym) This age is comparable to the late 19th and early 20th century with X-ray tech and penicillin were discovered.
All the different drugs and technology being worked on now is truly amazing.
There are several different branches that are being explored.
FWI one branch I have stayed away from has been gene editing. For one thing it’s too early as any successful treatment on a mass scale at least for what I have seen. In a lot of cases it has to be fine tuned to the individual. Second, recent reports may actually cause serious side effects like cancer in other parts of the body.
I started following the technology that follows the thought that the body’s own defenses can be super charged or when the disease tries to hide from the bodies defenses the treatment can help the body identify these cancer cells to kill them.
The good and the bad. It seems when using this approach to fighting the disease there are no major side effects like you get with radiation treatment or toxic chemotherapy. It’s time to do away with treatments that use that old saying if it doesn’t kill you it will cure you. The bad, the technology being used like the Covid vaccines only lasts short term and seems the body defenses burn out or go to sleep so the challenge is finding a way to make the effects last longer.
Hey I don’t know about you, but anything that shows as much or better promise than radiation treatment or chemo and doesn’t make you sick trying to cure you I’m all for.
Charles
IBRX
Why not, it’s only money.
I’m on your leaky boat.
Westie just so you know, I always plan on I will need to buy in tranches if it moves down. I rarely buy when it’s moving up, unless there’s really good news. Limits both my losses and my profits. I am happy with my profits even if I sold before the peak.
Hang in there Westie, keep bailing. I still have dry powder. The CEO, CAO, CFO all reported sales at $3.42 but that was weeks ago and they received on Feb. 22nd restricted shares that ave. twice as much as they sold so they are in the same boat. Coincidence they all set the same sell price and sold below the peak of $4.00 They are up on the amount of shares they hold in total.
As the year rolls on and I trade I will keep that price they sold at as a high water mark for me to trigger a sale. Maybe I sell everything maybe it’s time to keep half at that time who knows.
The bid is walking down the ask and volume is down. How low will it go?
I bought another tranche
https://www.sec.gov/edgar/browse/?CIK=1326110&owner=exclude
Are there any significant events/approval decisions/etc. coming up in the near term?
Thanks for sharing.
Mr Hunter which one? We have been discussing a few on here.
Mr. H if you’re talking about IBRX it could go either way 50/50 buy the rumor sell the news. Brutally honest, the quarterly report is due real soon. I expect them to report a loss. Hopefully it narrows from what it has been. They have an ATM program in place so don’t be surprised if they announce more shares sold. They have been approved to sell BCG which is used in combination with their drug. It was in limited supply from the only US manufacturer MRK. They sourced a pharmaceutical manufacturer in India that was approved by the FDA and that company is in collaboration with them and on working to get approval in GB and the EU which is another milestone later this year or next. There may be news in the report on this. They are also working on this to be used for small cell cancer of the lungs. There’s more but too much to write here about.
Folks
Looking into Fairfax Financial, FRFHF, the CDN copy of Berkshire. The reason is the USA political and climate conditions might be tough for insurance the next few years. So I looked at FREHF but cannot seem to get a good idea of the USA percentage of coverage, not the USA risks within that coverage. FRE annual reports and letters describe a very global, India heavy, picture – which I like right now – but the North American segment is still the highest.
I shall contact their IR as well, but maddingly they do not easily publish an IR email link (WHY IS THAT).
I do like the attitude and the “copy” of Buffett’s annual letter.
Any help understanding their US risk is appreciated.
Tizod,
I’m not sure why you are worried about US insurance exposure. Rates always adjust and insurers end up at least as profitable, if not more so.
Picked up SJM, CPB on 5 year lows. Both have gone up a bit. I wish things would slowly go up or down, but I think that is the nature of investing in common stocks.
Mr Conservative, great pickup on SJM (J.M. Smucker Co). I also recently jumped into CPB (Campbells Co), missed the low by a buck though.
I’ve been in FRFHF in a tiny way now for almost 2 years and followed if for a long time before that… Prem Watsa is the one considered to be the Canadian Buffett. Interestingly, he and Fairfax were penalized for many years mostly during the ZIRP years for not following the crowd and extending duration to reach for yield….. He turned out to be right and ultimately rewarded for it… I own FRFHF at 725. As far as how to understand his US risk, I wouldn’t begin to pretend to know how to judge it, but what I do know that I find it relatively easy to relate to and trust someone who’s criticized for running his company too conservatively….. Then again, he does take some unusual credit risks for someone considered to be conservative…. For example, if I remember correctly, they own about 40% of ATCO Corp which is the old Seaspan and its because of their involvement that I’m willing to own ATCOL 7.125% 12/1/2027. At 25.18 ATCOL is currently callable on 30 days notice and has a YTM of 7.03%.
Berkshire Hathaway 2024 letter. Took a peek, then filed it under: read when you get time. Operating profits up ~27%, up ~10 billion to 47 billion. 47 billion, yes, a lot of money, seems a little skinny on 1.15 trillion in assets. K-66. Of interest to me: most ~70% of the incremental profit — and a big chunk of total profit — was generated by insurance operations. Page 5. Over the last 5 years, Berkshire stock performance edged out the S&P 500 but substantially underperformed the S&P Property and Casualty insurance index, K-32. So wondering is Berkshire now an insurance company with a drag from its unrelated businesses?
Happy reading.
https://www.berkshirehathaway.com/2024ar/2024ar.pdf
Electricity bills will soon begin rising sharply in 13 states plus DC. Increases may be 10-20-30%, (first of three years). Potentially affected states are: Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, District of Columbia. The big increases are the result of an obscure wholesale electric pricing mechanism.
The news has been out in the trade press for several months but almost nobody paid any attention until now. Retail utes are now sending friendly e-mails. State PUC’s are in a “it’s not my fault” mode. Bloomberg has just breathlessly reported that the Feds, who more or less oversee the pricing mechanism, are now so alarmed that they might even … call a conference. Perhaps a coincidence but CEG and Vistra both dropped ~8% when the story came out. “Round up the usual suspects.” – Casablanca.
There have been behind the scenes battles going on between retail utilities and the data center operators over who pays what share of the costs of adding expensive new power plants. This may force the issue. Can’t predict how this plays out just yet. Watching with interest. JMO, DYODD.
Definitely alarming for the Midwest. For Northeast, it’s business as usual.
WMT -6.5%
JPM -4.5%
A disturbance in the Force? Or just gas?
Sold MAIN (Main Street Capital). This was a tough one to get rid of. They say not to love your stocks, but that one………
Price just seems really out of whack (something like a 225%+ total return on this bought a few weeks after the Covid crash). I may live to regret, but its already on my watch list to pick back up.
ACRE – anyone have thoughts on this name? Recent dividend cut and signifcant improvement in loan book. seems like an opportunity to buy at depressed levels for an 11% yield
The more it drops, the more I buy.
Love,
Rida
No official opinion, but a few folks think it might be bottoming.
For those who know… know..
Fell out of my chair laughing.
ACRE cuts dividend, ABR was expected to cut the dividend. EPS of .40 and paying out .43 something’s got to give.
I drove by my local credit union repo lot and the amount of cars there they doubled the size of the lot.
A new fund. Have not truly examined. I know some posters like the reinsurance market.
https://mercury.bloomberg.com/news/SRPZUDT0G1KW00
Speculative play: AGNC to 12.25. Last 10.49.
AGNC rallied from Oct 2023 to Jan 2024 and has traded sideways since. It appears to be headed toward a breakout. With the current $0.12/mo. dividend, the CY is 13.7%; yield at 12.25 would be 11.8%.
I have a small position from Dec 2023 and am not planning to add. There are too many opposing market forces to feel confident in the play. Besides, I rarely trade. I like the look of the chart and the yields, which is why I posted.
R2S always appreciate when you post stuff like this. Of course I like to look at the BB or the preferred if there’s any instead of the common.
If AGNC doesn’t break out (turns down, whatever), the play is off.
Rocks, thank you. I appreciate your posts as you’re more of a buy and hold investor so you look at the downside possibilities as well as the upside.
Does anyone understand the special rules that apply to dividends that are greater than 25%? Apparently, according to Nasdaq UPC Rule 11140, in this case the ex-dividend day is set to one day AFTER the payment day. I can’t figure out how this can possibly work.
Specifically, I’m holding a small amount of TLF (Tandy Leather Factory) in a Roth IRA. They declared a $1.50 special dividend. The payment day is today (Feb 18), and the ex-div is tomorow (Feb 19): https://marketchameleon.com/Overview/TLF/Dividends/
The stock is currently at ~$5.30, which is close to its high. I’ve already received the dividend, or at least it shows as a credit in my account. Crucially, the price has not yet dropped to account for the dividend.
What’s happening? If I sell today will the dividend be clawed back? I don’t understand why buyers are still willing to pay the full price for a stock if they don’t get the dividend. Can anyone explain why this rule is like it is, and how it applies to this situation? Thanks!
“Because the dividend amount is more than 25% of the current market price of the Company’s common stock, the ex-dividend date will be February 19, 2025, in accordance with Nasdaq UPC Rule 11140. On that date, the Company’s common stock will begin trading without the right to receive the special dividend, and the price will be adjusted accordingly.”
https://tandyleather.irpass.com/profiles/investor/ResLibraryView.asp?ResLibraryID=142192&BzID=1625&g=835&Nav=0&LangID=1&s=0
Yes, but I didn’t understand the mechanics of how that works. Searching more, I think the answer is that the owner as of the record date does get paid on the payment date, but if the stock is sold before the ex-div date, they are responsible for paying the amount of the dividend to the new owner. Which is to say, it looks like it does get clawed back!
“If the ex-date is the first business day after the payable date, an investor needs to own the shares on the payable date to be entitled to the dividend (although perhaps not if the distribution is pursuant to a plan of reorganization in bankruptcy, as discussed below). When shares are sold after the record date but before the ex-date, the shares trade with “due bills,” meaning the seller has to give the dividend to the buyer (i.e., the right to the dividend travels with the shares). The period between the record date and the ex-date is referred to as the “due bill period.” For shares held through The Depository Trust Company, DTC debits the account of the seller’s clearing broker and credits the account of the buyer’s clearing broker by the amount of the dividend.”
https://www.fa-mag.com/news/avoiding-mistakes-with-record-dates-and-ex-dates-51944.html
“Due bill period” seems to be the phrase to search. I still don’t understand why it is done this way.
Wow, that’s an obscure one. I would have guessed it would be related to qualified holding period but that would suck to give away 25%+
I don’t understand. If I buy today, do I get the special dividend?
Fidelity shows record date of 2/3, but the description says “On that date, (2/19) the Company’s common stock will begin trading without the right to receive the special dividend, and the price will be adjusted accordingly.”
I think the term to search for is “due bill”. I don’t fully understand this, even though have been bitten by this in the past. Here’s an explanation from the SEC at https://www.investor.gov/introduction-investing/investing-basics/glossary/ex-dividend-dates-when-are-you-entitled-stock-and :
“If the dividend is 25% or more of the stock value, special rules apply to the determination of the ex-dividend date. In these cases, the ex-dividend date will be deferred until one business day after the dividend is paid. In the above examples, the ex-dividend date for a stock that’s paying a dividend equal to 25% or more of its value, is Wednesday July 18, 2024.
“Sometimes a company pays a dividend in the form of stock rather than cash. The stock dividend may be additional shares in the company or in a subsidiary being spun off. The procedures for stock dividends may be different from cash dividends. The ex-dividend date is set the first business day after the stock dividend is paid (and is also after the record date).
“If you sell your stock before the ex-dividend date, you also are selling away your right to the stock dividend. Your sale includes an obligation to deliver any shares acquired as a result of the dividend to the buyer of your shares, since the seller will receive an I.O.U. or “due bill” from his or her broker for the additional shares. Thus, it is important to remember that the day you can sell your shares without being obligated to deliver the additional shares is not the first business day after the record date, but usually is the first business day after the stock dividend is paid.”
Does this help? It explains the rationale behind the change in x-div date…
https://www.dividend.com/dividend-education/special-dividends-everything-investors-need-to-know/
As stated above, sometimes special cash dividends make up a large percentage of a stock’s price. Many times this means that these large special dividends are applied with certain rules that differentiate them from normal dividends. The biggest difference concerning special dividend stocks is that the ex-dividend (for special payouts) comes after the record and pay date, not before (like is the case with regular dividends or smaller special dividends).
This difference occurs because on the ex-dividend date the stock exchange adjusts the stock price to account for the dividend to be paid out. If this same procedure were to happen in the case for a large dividend, say 25% of the stock price or more, then this might signal a huge drop in share price that could affect many traders and investors.
Rather than deal with these headaches, the stock exchanges apply a special rule to deal with these large one-time dividends. The exchanges (not the companies) set an ex-dividend after the record and pay date. Now, you may be wondering how some might receive their dividend if it is paid before the ex-dividend date (the date on which owners of a stock have the right to receive the dividend). To get around this obstacle, the stocks bought or sold in the period from the record date to the ex-dividend date (the due bill period) are tagged with something called a “due bill.”
The due bill documents are a contract that lays out a stock seller’s obligation to deliver the dividend to the stock buyer. For example, let’s say company XYZ is offering a special dividend that is worth 30% of the current share price. This dividend is tagged with a record date of March 1, a pay date of March 15, and an ex-dividend date of March 18. If an owner of stock from XYZ holds the asset through March 15, he would receive the dividend paid at that point. However, if he were to sell that stock on March 17, then the new owner of the asset on the ex-dividend date of March 18 would have the right to the dividend that the original owner has already pocketed. Therefore, the due bill attached to the stock is a promissory note mandating that the original owner passes on the dividend to the new owner.
Date Dividend Event
March 1 Record Date
March 15 Pay Date
March 18 Ex-Dividend Date
This process is a bit complicated, but it is in place so that a stock’s value is not unfairly compromised in a manner that might impact margin calls or other trading transactions. However, this 25% or more rule is a general rule, not a strict one. Many times foreign dividend paying stocks are not held accountable to this stipulation by the stock exchanges. Moreover, some domestic shares are granted an exclusion from this process. It would benefit investors if the criteria to determine which stocks are subject to these rules were made public, but currently the factors FINRA uses to make this call are determined on a case-by-case basis.
Thanks! I’m not sure the explanation for “why” makes much sense though: “If this same procedure were to happen in the case for a large dividend, say 25% of the stock price or more, then this might signal a huge drop in share price that could affect many traders and investors.”
Sure, but the stock price is still going to drop by the same amount on the ex-div date. The real question is what benefit there is to delaying this by a day. Reading this and other article, I keep getting the sense that the authors (or maybe editors) are just repeating an explanation they’ve seen elsewhere.
I haven’t read it anywhere, but my current belief is that the “real explanation” has more to do with margin calls. Picture an investor who is fully margined and holds a large position in a stock that declares a large special dividend. If the standard timing was followed, the stock price would drop by a lot before the dividend is credited, possibly triggering a margin call followed by automated selling.
By paying the dividend first, the value in the account is artificially high for a short period rather than artificially low, avoiding the margin call. The downside is that “due bill” process is necessary in the cases where the stock is sold post-payment but pre-ex-div. Or maybe there’s a better explanation, but at least this one strikes me as plausible!
Margin calls and option trading are probably the chief issues. Strike prices often get adjusted to compensate for special dividends of that size.
I made a bunch of money year or two ago trading stocks with due bills. There are always people who don’t understand them. I like to trade stocks with special dividends and this is where they typically show up.
Scott, that’s clever.
So does that mean you were buying on the pay date and then holding just past the ex-dividend date?
2WR, nice explanation. TY.
It depends on the issue. Commonly you can buy early after the announcement and it will run up by an amount almost equal to the special dividend. Then sell just before the pay date and buy again between the pay date and when the due bill comes due if the price dips. Then you can also buy after all is done since the price will tend to go down more than the dividend as people want out after an easy score. You can buy then and wait for it to recover to pre-dividend levels. Each issue seems to be different though as to which technique works best (if at all) and you just have to watch for opportunities. It is not a fool proof way of making money when you are as big of a fool as I can be, but I take what advantage I can get. Anytime a price movement is big there is opportunity to make money. But these are likely all companies you are not familiar with so that is another source of risk.
Obviously, there will be other people out there playing similar angles so it just depends on where the bulk of the money goes and when.
There are also option plays here which I have made money on, but options get their strike prices adjusted and it gets very messy trying to keep track of what all of the pricing will be and whether the strike dates will work out for you. Not every 25% dividend gets a due bill and/or option adjustment so there is a good bit of risk and close monitoring is required.
Conagra Brands trims 2025 profit forecast on supply constraint woes
https://www.reuters.com/business/retail-consumer/conagra-brands-trims-2025-profit-forecast-2025-02-17/
Happened to notice CAG down 7%. The CY is about 6% with a 35 cents dividend. Just FYI
Conagra got ahead of inflation by factoring in much higher-than-consensus inflation. I liked. Then inflation leapfrogged Conagra. Now chicken, the dollar and tba tariffs. Not a flipper or a day trader, but I do like to find a good value. There’s a bottom somewhere in CAG and the food stocks but I can’t say where it is. Surprises me that even safe, sane and stable General Mills is down more than CAG year to year. JMO.DYODD
Bear, I been thinking the same here. You just listed a triple threat. These companies are not going away, but where is the bottom? The yields are starting to look attractive but if business contracts then there’s a chance the dividend gets cut and reverts to their historical average and the share prices can fall even farther.
I’m buying both, but not a ton of either.
J are you watching KLG ?
the guy who grinds the cheezit flour says oven 5 makes the best cheezits. I hung out with a guy who worked with Kellogg and his line was ‘they screwed up when they stopped worrying about making cereal and started worrying about making money’….I still buy eggo and cheezits (extra toasty only!) for my kids but think their other brands are soft. I like the mega conglomerate elements to general mills and cog and the product development. (and the sheer corporate brutality of adm – another dead man). unless Kellogg gets real cheap I’m gonna pass…might buy a touch of Pepsi (all restaurants in the future will be taco bell). hell, beef is so expensive maybe I should buy seaboard or Hormel. cheers
It seems to me private label is the growth here. Aldi, Wegmans etc seem to have carts full of staples that the big agri had. I do not know if KLG is a big supplier to them, but if they are it is at way low margins the street is not expecting from them. So I’ve avoided. What I have not found is the public companies supplying the private labels: like a Jabil, Flex or Foxconn in tech, I’d like to know the public contract manufacturers taking over this space.
Good point tizod. Sometimes you can figure it out from the packaging. Dare foods in Canada I think is the maker of creme filled Maple leaf and Pumpkin spice cookies for Trader Joe’s. Bronco Wines makes the now $4. Buck Chuck wines for them. I knew of one winery, actually 2 that did private labels for both CostCo and TJ’s The one for Costco had a 100,000 case order and after the first 50,000 case shipment Costco cancelled. The one for Trader Joe’s lost their contract when they refused to hold the same pricing after being the same for 3 or 4 yrs.
Local grocery chain called Grocery Outlet has now started offering paper towels under their own label but of course they don’t actually make them.
Dare Foods has nine manufacturing plants and over 1,400 employees in the United States and Canada.
Their products are available in North America and more than 50 other countries. They are Privately owned
GO ( Grocery Outlet ) went public a couple years ago and pays no dividends and stock is near a 52 week low. Their model is being a discount food distributor and the stores are franchises like a Domino’s pizza.
Two thoughts on food companies:
– their bonds
– RFK, Jr?
agribusiness will make any food people will pay for. doritos are exceptionally addictive not because the magic of food science and advertising, but because people want it and will pay for it – if they want sanitorium corn flakes or lean pork instead of chicken wings, they can pay for that too – they can pay for whatever they want. for me, it’s akin to blaming the provider instead of the ‘john’, who wanted the thing on offer. 2nd oldest profession, after all … “”Though the mills of God grind slowly; yet they grind exceeding small” – longfellow all the way back to plutarch “The millstones of the gods grind late, but they grind fine.” RFK is just a nice excuse to get a nice company at a nice price.
one more joke. I was hanging out with a dude from Ardent mills / Cargill. He said they were trying to figure out what to do with all the chickpeas. So, they make snackie foods. (they’re all over the place and rich white gals love to buy it)…there was a problem….it made everyone flatulent.
J, I must have bought at the low for MRK and wish I had bought more around the 83.00 I paid. Seems to have gotten away from me.
Thanks RS for pointing out CAG price drop.
Conagra (CAG) and General Mills (GIS) had large drops two days ago. Those sudden drops are sometimes buy opportunities. CAG lowered its EPS from $2.45 to $2.35. P/E is 24. Dividend 5.6% GIS P/E 12.8. Dividend 4%. They are both up around 3% since the drop. I own some of both.
Two weeks ago, Bloomberg reported about an alarming drop profits at Exxon and Chevron because of plunging refinery profits. (“a flood of new output amid stagnating demand “) Reuters, likewise: “Big Oil bleak on refining profits going into 2025.” Today, its different. Bloomberg now says that refinery profit margins are — and have been — fatter than ever. Small refinery closings (forced by high upkeep costs) will benefit Exxon and other Big 3 mega refiners. Less competition and cheaper crude inputs.
Activists have lately been skipping over the “declining sector – Darwinian struggle” story lines. There is activist interest in refiners like Phillips. (PSX – up 11% in one month.) I avoid buying refiners directly, (profits too volatile, a bad Canadian experience) but I would if I could add Aramco. Googling through the corporate shells, it seems that the Saudis control the largest US refinery, The ability to profit from cheap drill-baby US crude inputs while influencing world pricing by turning the OPEC output spigot on or off seems like an unbeatable advantage. JMO, DYODD.
“Houston’s oldest refinery is shutting. It won’t be the last. ”
https://finance.yahoo.com/news/houston-oldest-refinery-shutting-won-140000129.html
Bear, I read the article earlier. Doesn’t give me the warm fzuzzies about the future of gas in California. I just bought gas at Costco and I was shocked it seems like it was 45 cents higher than a week ago.
— “SAN DIEGO (FOX 5/KUSI) — The average price for a gallon of regular gasoline in California has risen 44 cents from a month ago, according to AAA.” — So a 45 cent jump was a good estimate. It sounds like a temporary issue. A NorCal refinery fire on top of a Winter/Summer changeover supply shortage.
— Waiting to see on tariffs, but absent a trade war, I think crude oil prices could very well go down. (This is a minority / outlier / surprise-of-2025 view.) California gas prices may be a special case: seaborne shipping, no pipelines, refinery closings. JMO. DYODD.
Bear, I may be in the minority camp too.
CM, that money is going to the state not new profits to the companies. California has the highest gasoline prices in US. Just paid $2.79 in NY and prices have been steady.
I just did a western NY thru MA to NH road trip. Highest prices were 3.02 in MA and in NH was 2.68. Remember, in CA there are other overheads for the delivery + station owners (worker pay/benefits, shipping costs and more) that drive the prices, and then the taxes. Politicians have made some ignorant comments (surprise): the barrel/refined prices are the equalizer, and that is what should be talked about. The PUMP prices are artifacts of the adders after that, any they should be looked at for the specific case. This is a prime example of that!
Dan it’s not just taxes we had a refinery fire at one of the refineries and it’s been shut for 2 weeks.
I agree with Charles. This is not a tax issue. One large refinery is closed by fire, two are closed for seasonal maintenance. (Chevron, Valero). About 30% of state refining capacity offline. Many refineries are running different blends now which constrains supply reallocation. JMO. DYODD.,
Purchased a starter position in MRK this morning. Again breaking my rule of buying stocks over 50.00 a share. I can buy more shares and therefore my profits are greater on lower cost stocks. But this company I have been watching for the potential to own a world class pharmaceutical stock.
Charles, In my opinion, very good stock pick. Watching that one also. It has fallen nicely into a more reasonable range now.
Regarding your “rule” on not buying stocks over $50 because profits are greater on lower cost stocks. Wondering if you can elaborate on that? That doesn’t make any sense to me.
Pig, that’s hard to explain.
Just mentally I buy 100 shares of a 100.00 stock and it drops $10.00 like WHR has done recently is a little unsettling.
But if I spread out the risk with 100 shares each of 3 stocks at $33.00 each I spread the risk out and the odds that 1 or 2 of the stocks have a gain to make up for any losses.
Yes, MRK is getting very interesting. Morningstar analyst report dated 2-13-2025 has a fair value of $110 (available for free on Schwab when you do a stock quote). Nice dividend of around 3.8%. Dividend payout ratio of about 65%. Forward P/E ratio is about 9.4
I also own KHC paying a very high dividend of over 5.5%. Dividend payout ratio is the low 60% range. FWD PE after lower 2025 guidance is 10.7
Both of these I attribute to market concern over Kennedy’s HHS appointment. Overreaction (IMHO but DYODD). I may a buyer of MRK shortly
Steve, I’m not afraid of the big bad boggy man. What is he going to do?
KHC I personally like a lot of their products and I try to find them when they are on sale and stock up. I grew up using their products and I’m not sure how the younger generation feels about them. From what I just see when I am grocery shopping has been legacy brands have jacked their prices up to maintain margin and not just because of inflation. I rarely buy redi-made pasta sauce but I did recently and I couldn’t see much difference between Prego, Classico and Rao’s except the price. I feel CPB overpaid for the brand.
I think Buffet still has a position in KHC but I heard he wasn’t happy as it didn’t follow his rule of buy good companies at good prices. I had read they were heavy in debt and downsizing to pay it off.
Actual results compared to CEO promises don’t look good and trying to maintain margin with eggflation (pun alert ) doesn’t look good.
Charles-
I’m picturing you with a cupboard full of beans and ketchup.
OMG where did you put the camera?
My wife is scheduled for knee replacement in 3 months and the doctor has given her a list of things he doesn’t want her eating so this is going to make a radical change in what is on the menu.
I am not concerned about RFK Jr. Some of the angst is just stupid. Removing fluoride from municipal water is one. Guess what America? Lots of bottled water has no fluoride.
From a Merck perspective, RFK may be doing things like getting rid of vaccine mandates. Many countries in the world do not have government mandates and their use of vaccines is still a very high percentage. This and possibly set a higher bar for vaccines to get approved. So, there is some potential risk to Merck’s earnings. But Merck is down from a high of $134.63. Seems excessive to me.
Yes, KHC has its share of problems. Some of the ingredients it has in it foods may be banned. They will replace it.
Just to add a little more to this. The Gardasil vaccine for HPV. Some states require it before a female student can enter the 6th grade. These vaccine mandates are likely to be eliminated by RFK Jr. It probably becomes an available vaccine you can get if the doctor and parent believe it is necessary. The recent drop in Merck’s stock price is they stopped shipments of Gardasil to China until mid-2025. If Kennedy eliminates vaccine mandates, how many states have this requirement and what will that do to sales? Does Merck have other vaccines that have mandates that will see some drop-off in sales? Vaccine mandates were great for pharm sales creating “captive” audiences. On the positive side, Pharm wants PBMs regulated, and Congress with the Admin seems to favor that. I worked in the PBM industry. They do lower prices. It will be sold to the public as savings but over time, drug costs will go up depending on what is in any legislation. Like every investment, lots of variables to consider.
Charles M, I dumped my KHC about eight or nine years ago and I’m looking to replace it with CPB because I like V8, Cape Cod, Goldfish, Noosa, Pepperidge Farm, and Rao’s.
You never associated with Squeaky Fromme, did you?
My projection guess for MRK is 72ish, an area with good prior support. With the current 81 cents dividend, the yield at 72 would be 4.5%. I bought PFE, also beaten up, at 25 because the yield is 6.9%. I’m sure investors have other reasons to bottom fish pharma than yield, but it works for me.
R2S I have yet to place a GTC bid for the next tranche. I guessed I wouldn’t be buying at the low so I expected to average down. Glad to have you on board. Please keep the updates coming.
This is my second add to my own ETF joins BMY
CSX (CSX Corp) shareholders, we get an 8%+ div raise.
I have been watching growth stocks that pay a reasonable dividend. By that I mean the dividend has to be in a range of 1% below or 1% above what you could get on a Treasury bill. I feel the opportunity for growth might outweigh the added risk. You have to understand that getting good stocks on a discount is rare.
Normally this happens when a company’s earnings are under pressure or the economy is bad .
For decades companies have had growth outside the US. So a part of the earnings depend on the international market. With earnings both domestic and foreign if one market is down and the other is up it slows growth but balances out. What worries me is if both markets are bad it’s a double whammy.
Right now with these tariffs we are giving markets outside the US the impression of the ugly American. Consumers in other markets will decide they don’t want to buy well known US brands and it will take time for that to change. This isn’t just retail brands it will affect shippers and wholesale markets
I still want some of these stocks but I will proceed cautiously.
LAND – What’s going on with LAND today? +4.75% on a day like today? I don’t see any news and it’s certainly not up on interest rates moving up… Anyone know?
Powell made a timely comment today about mortgages eventually becoming impossible to get in certain areas due to high costs of insurance. The California state high risk pool isn’t able to cover its wild fire obligations. It put out a $1 billion capital call out to the state private insurers. (This is pretty much how the state pools work so no surprise. ) Insurers have 30 days to pay amounts based on their California market share. I estimate State Farm could owe ~200 million, Farmers, ~149 million and little Mercury MCY, 61 million. Half gets passed through to policyholders, half is paid by the insurers.
When losses rise faster than premiums, insurers often pull out of markets, pushing more people into the state pools, something both Florida and California have seen. I think reinsurers are better bets than state-regulated retail insurers. They have flexibility in setting rates and are not obligated to remain in unprofitable markets. I think the preferreds are safer bets there.
Here’s a list of insurance companies and premiums written in California in 2023:
1. State Farm: $2.7 billion
2. Farmers Insurance: $2 billion
3. Liberty Mutual: $908 million
4. CSAA Insurance Exchange $895 million
5. Mercury Insurance: $839 million
6. Allstate: $792 million
7. USAA: $742 million
8. Auto Club: $720 million
Compiled from various news sources. JMO. DYODD.
Thanks for the info..I hate to see. Usaa on that list……
Information came from news stories citing Moodys, S&P Global and JPMorgan estimates and may not be apples-to-apples or complete (Chubb 1.5 billion loss and Travelers 1.7 billion loss are missing) but should give a rough relative estimate.
There are some odd results from blanket assessments. You can be right about risk and still lose. Allstate and Farmers had slowed CA sales. State Farm had correctly seen the LA risk and cancelled many LA policies, All ended up with large assessments. All reasons why I prefer reinsurers., easier to get away. JMO. DYODD.
Bear,
Any insurer that operated in California in the past 2 years is subject to assessment was my read.
I’m wondering about assessments on insurers no longer operating in Cal.
TSLA looks like it might give back the post-election surge from 250. Not a prediction.
Ford , not a natural, yet with the reasonable fade below the two yr low, seems to me a reasonable item. Yes, lots of negs ( trade, tariffs, ect. ) …. any thoughts welcome …. I am a adder here & on modest fades.
Has paid a .15c qtrly & special …. how long ????
Jim, I added today. relatively small holding but have always liked them. They are investor friendly. Sold last yr for a huge gain, bought back in the fall and have added a few times since. I have patience with this one. Other investors don’t seem to though, lol.
I don’t know if it matters to you , but F public common holders do not control
the company. The Ford family own the supervoting shares and I believe 40% of votes as a result.
So, don’t expect them to accept Tesla’s bid at $100 ,funding secured.
yes, the last part is a joke.
F-D – the preferred issue is a holding I have my eye on. I have owned it in the recent past also