That is only a perception. And perceptions are volatile.
A change in perception could evaporate an opportunity quickly.
Dividends rely entirely on money available in the account# retained earnings of the companies' balance sheets being the central issue recapitalization. The route to dividends are many and varied. One route -the DTAs coming back to the companies in full- has been hit. But, even this one route is not gone completely but suffered a first blow. Given the judiciary system structure (district courts, appeals court and Supreme Court), this is a minor blow.
If you believe:
- an appeal could reverse or partially reverse Lamberth's decision,
- that SCOTUS may still be where Perry's will end,
- that Sweeney's court will move forward with Fairlhome's case,
- that the new Congress may bring new, different schemes perhaps friendlier to shareholders,
- that conservatorship will not last forever with Treasury skimming the bottom line and that either reform or restructuring may be in the cards.
then, -at these prices- Jrs. are just about the same bet as they were when the 3rd amendment was announced and we all dropped from our beds and spent weeks and months in disarray. Sometimes even regretting the trade.
Those looking from the outside may see this as the last opportunity to build a position at reasonable prices. If you believe that the companies may stay -even if reformed- and shareholders may play some role -even if minor-, then the dividends thesis has not changed. The large drop in prices bears no relation to the original thesis which hasn't changed. In other words, if someone invested in Jrs. the day before the drop there is no reason to be out today.
Lastly, don't forget this important detail. We do not know the views, backgrounds of the -potentially- 3 judges that will handle Perry's appeal. But we do know now Lamberth's personal views. In spite of his ruling, he himself questioned the 3rd amendment by bringing up "feelings of discomfort" or it being a deal that raises eyebrows. All after stating it was not up to his court to assess the morality or fairness of the amendment. If a judge who strictly followed the letter of the law is questioning it's spirit, what are the chances that 3 different judges may not feel the same and may want to rule differently?
