Sir Royalty Income Fund T.SRV.UN

KEG DISTRIBUTION REDUCTION WILL WEIGH ON SECTOR SENTIMENT

[logicandinertia]

KEG reduces distribution this morning...


"It is very difficult to predict when The Keg will be permitted to reopen in the many communities in which it operates," said Mr. Kip Woodward, Chairman of the Fund. "It is equally difficult to predict what, if any, operating restrictions may be mandated by various government authorities upon reopening. Regrettably, the only prediction we can make with confidence is that it will be many months before The Keg can come close to achieving the sales levels it enjoyed pre-COVID-19. The reduction in sales during the disruption means the royalties to be paid to the Fund will also remain significantly lower. In light of this, the Trustees thought it prudent to revert to the previous distribution level of $0.035, initiated in the spring of 2020, in order to ensure adequate cash reserves remain in the Fund for the medium and long term."

[BlueJay2020]

The timing of this doesn't make a lot of sense to me, with most parts of the country opening up now. They've managed to get this far...

[flamingogold]

Keg is the best Canadian brand in the restaurant space and for this reason alone I continue to own it. But, even the best managed companies can make mistakes. Back in October cases were rising yet mangement decided to up the dividend. This is a company that is primarily reliant on indoor dining and with winter approaching and cases rising they moved in error to up the dividend. Having said that

[logicandinertia]

Agreed.  Dumb mistake.  

[logicandinertia]

Is actually interesting that keg has held up .  You see this frequently with small cap cdn stocks that are primarily retail held.  There isn't an immediate drop as most won't even know the news.  So there are stale retail bids at lower levels that are hit .  As the news filters thru, it likely drifts lower over coming couple of weeks .   Since the ill advised

[flamingogold]

Given that Keg is the leading brand in the sector, timing for a flip could be tricky. Indoor dining is on the verge of re-opening and given the vaccination success results in Israel, chances are we will never enter a full lockdown ever again in our lifetime. Sooo, roll the dice, sell and buy back lower? Or, just add to the position on weakness.

[jcw604]

Added more on weakness.

[lostcauses]

Good insight. More than 7% down on close.

[logicandinertia]

Yeah, with a bunch of small cap institutional managers and some retail running quant-driven portfolios, negative revisions (i.e. earnings estimate changes, dividend cuts, price momentum, etc) don't show up until next day report from services such as CPMS.   This triggers sell programs for those with weakening rankings and vice-versa for strengthening firms on a quant basis.  You