RE:RE:RE:RE:RE:RE:Allocationrighand2 wrote:
I wouldn't short a stock paying such a high dividend. And there is always the possibility that they might raise the dividend, which would cause the share price to jump to a new "normal" level. I tend to simply hold a core position for the income, and buy traders when a financing comes out. Maybe not as aggressive, but I am an income investor for the most part. Basically, we are on the same page.
You're correct that the distribuiton, and the frequency of it, is a disincentive for shorting. I would only do it under specific circumstances and everything lined up. For example, if I expect an offering relatively soon, the stock has just popped, and it has just gone ex-div, then I'd have almost 8 weeks and to hold the short position and only pay one dividend. I would also only short about a thrid of the size that I would go long. It's not something I would recommend people do. Like you, I really don't want to pay dividends. With these solid, high yield positions, the wind is really at your back as a long holder.
Even if I end up flat on this one, I'll continue to participate in the offerings. Once it seems that they may slow down the frequency of financings, I'll likely take a position to hold longer term. There is nothing wrong with just purchasing the shares and holding them for years. In fact, it's the best course of action for most.