PD

[David Randolph]

On Thurday night Cramer talked bearish about PD, take a look:

«Cramer believes copper prices have peaked, and therefore the stock of Phelps Dodge has peaked.»

The next morning the stock opened unchanged and then made a white marubozu with the second highest volume on record  

9.6 million shares traded for a $130 stock is something to take notice of. This reaction to Cramer's  bearish take tells me someone or everybody was just eager to buy. The long and medium term ascending trend will probably continue and PD will possibly make new highs above $138.50 this week.

The risk is low, and I see $10 to $20 upside potential for the next couple of weeks. We still have about two weeks to the end of the month, so I think the Fast Portfolio needs to take advantage of this move.

Therefore, I'll buy PD at today's open for the Fast Portfolio, 33.33% of capital as always.

[puenthouse]

I am following you to the T on this SOF-Fast.  Saw it was going down and bought at 125.  If goes bellow I sell, but expect it to test support and rebound.

[Jimbo]

Hi puenthouse

I'm still a newbie in trading and I apologize if I'm wrong but you actually bought at $130. It is true that is down from Friday's close but if you look at your quote you'll see it opened up. You see $125 is $130- $5 (a special $5 dividend as part of a program to return $1.5 billion in capital to shareholders):
http://biz.yahoo.com/ap/051020/phelps_dodge_special_dividend.html?.v=1

And because today is the ex-dividend date I think that makes sense 

[puenthouse]

No, im pretty sure i got it at 125.  Here:

                                                                                   bought   current   loss/gain
PHELPS DODGE CORP COM    31    3,854.85    3,889.48    125.47    124.35    -184.76    -34.63    -0.89    -5.96 

Pretty sure i would have a gain at this point if they gave me an instant 5.00 but i will look into that article.

[David Randolph]

Hi puenthouse

I'm still a newbie in trading and I apologize if I'm wrong but you actually bought at $130. It is true that is down from Friday's close but if you look at your quote you'll see it opened up. You see $125 is $130- $5 (a special $5 dividend as part of a program to return $1.5 billion in capital to shareholders):
http://biz.yahoo.com/ap/051020/phelps_dodge_special_dividend.html?.v=1

And because today is the ex-dividend date I think that makes sense 

Probably this fully explains the quite strange drop PD had yesterday (I really couldn't understand the market action yesterday), I don't have time now to read the article or to see if I got any special dividend in my account (because there are only 13 minutes for the opening bell and I still have to write and send the newsletter), but those would be great news Jimbo, thanks for posting 

(probably the dividend will be given some day later, to those who held shares on Friday at the close. That also explains the previous white marubozu and volume. I'll look at this in detail at the next update, in the meantime, I see only good things owning this very undervalued stock).

Just one more thing, if there will be a $5 special dividend, it's like puenthouse bought his shares at $120, not $130 

[Amarens]

(probably the dividend will be given some day later, to those who held shares on Friday at the close.

David,

Do I understand it right that the dividend will only go to those holding on Friday? I've never held foreign shares before that where to receive dividend, so I do not know the procedure. Do foreigners holding also receive? Anyway just interested to know from somebody. Does not apply here because I bought PD on Monday like the 3SOF fast portfolio.

Thanks in advance,
Amarens

[huayilu]

Your broker will credit this dividend to you net of withholding tax.

[David Randolph]

Now I've had some time to clarify some news and views on PD:

1) The rally on Friday, the 11th of November, had nothing to do with the special $5 dollar dividend announced, because that announcement was made on the 20th of October.

2) There were no relevant news on that day for PD, except Cramer talking bearish about it.

3) About the $5 special dividend: «the board declared a special dividend of $5.00 per common share, or approximately $500 million, payable on Dec. 2, 2005, to common shareholders of record at the close of business on Nov. 16, 2005.»

Today is the 16th of November, so anyone who holds shares at today's close will be eligible to receive the dividend at December 2.

As a rule, I don't like to buy shares because of a special dividend. Many people buy to get the dividend and then there's a correction in the stock price superior than the dividend value.

So here's what I will do: I will try to sell PD at $127.5 for a profit of $1, or I'll sell it at the market just before the close.

[Ramsburg]

Hello !

We have further investigated this dividend issue and:
The ex-dividend date for PD was November 14, 2005.  We needed to have held shares of PD through market open on November 14, 2005 in order to receive the dividend payment that will be paid on December 2, 2005.  Due to the fact that we did not hold shares of PD on November 14 (before the open), 2005, we'll not receive the dividend.

I've just talked with David, and we are maintaining the trading plan already settled:
Sell PD at $127.5 for a profit of $1 (today)
or
Sell it at the market just before the close (today).

Best regards !

[setravis]

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