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Toofuzzy

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Toofuzzy

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Re: None

Wednesday, 07/14/2010 12:01:13 PM

Wednesday, July 14, 2010 12:01:13 PM

Post# of 1177
OT when a company issues more shares

Many times a company does what I think are stupid things like buying back stock when it is near its high or selling more stock near its low ..... why ... how is it rational.

NLY (a mortgage REIT) is issuing 50 MILLION new shares towards its high price which makes sense BUT it has a 15% dividend yield!

So shouldn't they be able to borrow money cheaper than the dividend payout?????

My thought is if they are selling the stock they do not believe it is worth more than they are selling it for now.

If they use the new money to reduce leverage the dividend goes down. If they leverage back up and rates go against them (short rates climb) guess what ...... dividends go down! I don't know how this helps the company.

Very
Toofuzzy

Take the road less traveled. It will make all the difference.

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