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Fooling Mr. Market

BySaj Karsan
Published 11/01/2012, 12:25 PM
Updated 07/09/2023, 06:31 AM

Yesterday, shares of TSR Corp. fell almost 20% as Mr. Market probably believes the company's shares no longer trade with the massive 30% dividend yield the company plans to pay out. But this is no ordinary payout. As we saw three weeks ago, on large payouts the normal relationship between the record date and the ex-dividend date goes out the window! Mr. Market moved that stock in error, in my opinion. If I'm right, investors who sold shares of TSRI yesterday thinking they had the dividend in the bag will be sorry.

If you want to know how this works, read the post from three weeks ago that discussed this very issue. They key in this case is that the ex-dividend date is going to come after the payout date, which isn't something you would normally expect. As such, for those looking to buy a net-net which is about to make a big payout, Mr. Market may have presented you with a golden opportunity!

Disclosure: No position

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