Manager Douglas Estadt’s strategy is to wait for a credible growth story before adding a position to his Management Access model. He then looks for the news to be priced in before he sells. On December 23rd, Estadt added Optex Systems Holdings Inc (OTC Bulletin Board Market: OPXS) to the model.
OptionsXpress has had some pretty interesting price fluctuations lately as a result of its recent special dividend of $4.50. The dividend was to be paid on December 28th. Because it was a special dividend worth 25 percent of the stock price, the ex-dividend date was much later than it normally would have been. Unfortunately, many investors did not realize this and bought OPXS on December 13th thinking they would then get the dividend, and subsequently sold it on the 14th.
While many stockholders were upset once they found out the ex-dividend date was December 28th, especially since OPXS has a closing price of $20.20 on December 13th which dropped almost 3.5 percent to $19.50 on December 14th, OPXS Chief Executive David Fisher wasn’t too apologetic:
The information was out there. If you looked on our site for the ex-dividend date, it said the 28th. … If you looked on Yahoo Finance, it said the 28th.
Special dividends can produce welcome income for both short and long-term investors. But they can also have drawbacks for shareholders who aren’t aware of the impact they can have on share price and sell after the record date, as discussed in this article by Michael Anderson on Seeking Alpha. In the case of OPXS, the stock closed at $20.41 on December 27th, the day before the payable date. On December 28th, OPXS had fallen about 23 percent. For many individuals, this drop could have erased any gains the dividend gave them.
*Prices and chart courtesy of Yahoo Finance.
