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No Investor Day , no dividend

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  1. #1

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    No Investor Day , no dividend

    I have been reading a bit about dividends in other countries and realized that many investors are screwed.
    In some countries dividend is paid once a year AND an annual general meeting is required by law, during which
    -amongst other things- the dividend payment is approved.

    The thing is, meetings are haram these days and thus have been postponed.
    Quite a few to a date tbd....

    Fortunately, virtual meetings are a way out, and eg Bayer will hold one

    And all this with dividends as the new interest payment.

    Last edited by Morrison; 10-04-2020 at 06:46 PM.

  2. #2

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    An individual investors’ presence was never important.
    However, the physical presence of the supervisory board and the members of the board is usually a requirement for the General Meeting.
    Thus the law had to be changed to allow virtual General Meetings between a/m executives


  3. #3

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    screwed in what sense? You can create your own dividend by selling X% of the holding?


  4. #4

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    And herein lies the fundamental problem with the concept of publicly listed companies: Corporate governance, shareholders, employees, and actual customers (the ones who buy whatever the company sells) rarely have perfectly aligned incentives. If fact, sometimes they are opposing.

    In the grand scheme of things, complaining about a suspended dividend payment or two seems out of touch with reality.


  5. #5

    Several companies have already gone down the route of holding AGM's on-line and at least some stock exchanges have issued guidance so I don't think the inability of holding a physical meeting will be an obstacle to approving the accounts, authorising dividends etc will be a problem.

    Whether a company will pay a dividend in the current environment is another matter entirely.


  6. #6

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    Original Post Deleted
    The market is made up of humans who are not omnipotent and often irrational. Clearly there's no shortage of examples for the market mis-pricing assets as an often unfortunate outcome in the course of price discovery. To me, whether a price is necessarily at “intrinsic value” isn’t the issue. Rather, whatever the price is (accurately valued or not), it will nonetheless always offset the dividend paid perfectly. It’s a “theory” as much as “if I leave a $1000 note on a crowded street, it will be picked up practically instantly” is just a “theory”. There may be slight deviations in real life, but the free lunch and profit motive of everyone necessitates it to be a reliable outcome and practically certain.

    As mentioned in another thread, for argument’s sake let’s assume the stock price doesn’t adjust perfectly to the dividend. What’s to stop someone from just buying shares before ex-date, sell right afterwards and collect the dividend as profit? Sure, there are many other factors affecting price (fed news, industry news, ceo scandal, etc) with the dividend being only one in the mix. And yes, the ex-div price may even be higher, so no true arbitrage some may say. But you can hedge away all the other variables that affect stock price at the time of the stock purchase with a put option or future so you have no delta risk at all at the same time you buy the stock for the div capture. Long delta on the stock, short equivalent delta on the future/option after the ex-date. Just ride out the ex-date, collect the div. This would be easy money if the future and option didn’t already price in a price drop with the dividend, but it does of course, which is why there’s no arbitrage possible. And if this wasn’t true, it wouldn’t last long after traders exploiting it basically forces it to be true (much like the $1000 note sitting in the middle of the street and everyone's natural profit motive)

    That said, I agree broadly on your point about the value of cash being different between companies at various stages of growth.

  7. #7

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    *edit: omniscient not omnipotent


  8. #8

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    What about companies that have decided due to govt pressure from one end, to cancel dividends and then also to reject govt handouts which are supposed to be used to pay staff salaries..

    David Webb is going to be torn about this one... Don't sue for the first action and then threaten to sue for the second.

  9. #9

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    I should have edited the quoted bit...

    Me thinks at this point both issues are irrelevant as there is very little that individual shareholders can do.


  10. #10

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    Original Post Deleted
    foxwendal described my point in a good (but complex) way. So i don't agree with you, utter bollocks is exaggerating A LOT. The only fair point you make is that the capital structure of the company might be less optimal buy retaining dividend instead of paying out. But it also be more optimal in a Covid-19 environment to retain the dividend because fantastic investment opportunities have arisen.

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