covering GCI ?

We received email regarding the GCI short earlier this week and wish to address it here.

First allow us to say how gratifying it is to receive warm thanks and informed feedback for the blog. It is deeply appreciated. Further, we salute all persons who take the proper steps to research and thoroughly consider their market activity.

The issue raised regarding the GCI, Gannett Co. Inc, short (see previous blog entry) is that the company is expected to pay a dividend of $0.40 per share to shareholders of record at the close of business Friday December 12th.

Very likely it will happen, although these days who knows? We generally seek primarily the best entries and exits we can and secondarily to be hedged and reasonably diversified, while of minor concern are dividends thus we seldom seek or mention dividends as a material factor in our investing. As with tax implcations and commissions costs, we do what we do and leave such considerations to the individual and his or her advisors as we view these factors as little more than "white noise".

Of course in the case of shorting, the short seller is responsbile to pay out the dividend to the lender of the shares. In the case of GCI this is a relatively significant percentage - $0.40 being over 4% or our short entry price. However we did indeed luckily hit the stock at its recent high, and the stock is down 17% as of today's closing in merely 2 days. In that light we view the dividend as simply a relatively minor cost of getting short when we wished to get short.

To those shorts wishing to avoid paying the dividend we suggest covering now and enjoying the significant quick gain, perhaps re-shorting next week when the shares trade ex-dividend although it would be normal to see the shares then drop by roughly the dividend amount so we doubt there's much advantage to doing so.

We were originally going to write that we'd hold our shares longer term, however good news this evening is that the auto manufacturer bailout has been quashed in the U.S Senate and in ill-informed response markets are selling-off in Asia and U.S. futures are significantly lower.

In light of this, we shall buy to cover our shorts in GCI if it trades below $7 which would represent a 24% profit in just over 2 trading days.

To those who believe the Chrysler bailout was successful back when that company was saved by the taxpayers, and to the company's credit it later paid back the loans, we encourage you to consider how much better off Ford and GM would be today if Chrysler had been allowed to go under thus allowing their competitors to hire Chrysler's best minds and hands and to take over their market share.

We congratulate the U.S. Senate for this rare bit of sanity, even if this result was more likely accomplished via the ignorance of petty partisanship rather than a sudden comprehension of basic economic history and market forces.



We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or mentioning them in this blog. If we hold existing positions we divulge the fact, otherwise we generally buy and sell as diarized here. This blog itself is merely a diarizing of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

To be notified when this blog is updated :
Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we, nor have we ever sent anything other than update notices for this blog to our mailing list. We only send update notifications when a trade idea is diarized, not if an update only contains general market commentary.