Ashford Hospitality Trust (AHT)

[dragon man]

It is interesting to see a company dance around a dividend cut in its press release. You can see from the title of the release (Ashford Hospitality Trust Enhances Liquidity Position Through Strategic Transactions) that Ashford Hospitality (AHT) went for the euphemism “Enhancing liquidity”. The suspension of the dividend is not mentioned until about the 6th paragraph of the press release.

I have noticed a couple of interesting items over the last few weeks. First, both AHT and Aircastle Ltd. (AYR) were significantly later (a week or so) than the previous year to announce their dividend position for the current quarter. It appears that boards of directors will drag their feet a little before announcing bad news. Or maybe it just takes them a while to come up with the best terminology.

I added a small position of AHT to this site’s Opportunities Portfolio on November 6. I understood that the market was pricing the stock for a dividend cut and thought the company had a chance to keep paying a significant payout. I was wrong. At this point I plan to “sell” the position out of the portfolio. It was interesting to see the stock price increase after the announcement was made to suspend the dividend. I guess all of the bad news was already priced into the stock.

My thoughts on Aircastle are a little different. I was disappointed when it cut the dividend, but still think the financial position of the company is strong. The new dividend still gives the stock a yield close to 8%. The company is a cash generating machine and I hope it does something in 2009 to enhance shareholder value. Either resumption of the higher dividend or some asset purchases to increase cash flow would be positive. AYR will remain a component of my site’s Income Portfolio.

At this point I see a lot of fear that an extended economic recession will start to have an increasingly negative effect on business and individuals. I am more of the belief that the economy will have a blow-out-bad 4th quarter then start to recover. It takes a while for the various economic stimulus packages to start to stimulate economic activity and signs of their impact should start to show in the 1st quarter. The inauguration of President Obama should give a psychological boost to the country and the rest of the world
this was taken from from person who wrote this on alpha alerts.