Thought i'd post this here, not just at CGS main board, so that non-premium posters might be able to comment if you wish... (i tweaked and added a little bit, especially toward the end).
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CCME-- thinking further about a dividend and various possible ways for mgmt to deploy this strategy...
As i see it, the shorts may not immediately run away on the announcement of a qrtrly dividend of, say, 10 cents/qrtr, 40 cents annualized.
If the shorts feel they can drive down CCME's pps another $1 or $2 on panic selling, as happened to ONP, UTA, DYP, CHBT, et al., then paying 10 to 20 cents per share in dividends over the next two qrtrs is more than worthwhile to get that extra $1-$2 per share downside cap gain by continuing to short and hoping for at least one big panic-selling capitulation day on, say, a big smear job by Citron or whomever.
So here's what i think CCME should do (and they should get down to buying as many shares in the days ahead before such an announcement, b/c i think the pps would soar on such news):
1) Announce an imminent one-time 2010 dividend of $1.00 per share (a 12.2% yield based on present pps of $8.20; only 9% on a pps of $11 or 7.1% on a pps of $14).
2) Announce that a regular qrtrly dividend of 15 cents (60 cents annualized) will begin in Jan of 2011. (At, say, a pps of $15 by Jan., if not much higher, that would be only a 3.9% annualized yield or less, leaving lots of room for future dividend growth over the years--a big positive for Wall Street.)
This way they can more likely smoke out the shorts upfront, and then as the shareprice soars, they are paying a much lower, quite "sustainably safe" looking dividend, which could be incrementally increased over the years.
I think Wall Street would stand up and cheer such a strategic move. Which do you prefer, an AT&T paying 6.0% divi with not much eps growth to come, or CCME paying a significant dividend with likely double eps growth in 3 years (and likely a 3- to 4-fold shareprice gain in a year, and a 6-8 fold pps gain in 2-3 years).
Comments welcome...
AI
