Buy Sotheby’s (BID)   11 comments

One of the stocks I have been watching lately has been Sotheby’s (BID). Today, they announced a special dividend of $4.34 to be paid in March. At a price of $48.29, which is the price I paid for it today, that is an 8.99% return for holding it until the record date of February 12th. While I like Sotheby’s prospects in a “rich get richer” world, that special dividend was just too much for me to resist.

Oh yeah, and their financials are clean too…

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Posted January 29, 2014 by edmcgon in Portfolio Moves

11 responses to “Buy Sotheby’s (BID)

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  1. Ed, can you provide a link to “a special dividend of $4.34 to be paid in March”? I found an article citing a $300M special dividend, which if I divide by the market cap of $3.32B, I get around 9%, same as you. Thanks

  2. Ed, I’m sure you realize the price of the stock will drop by the amount of the dividend.

    • Trader,
      If it does, I still like the company. Solid financials and strong prospects for growth. The dividend was just an excuse for me to buy it now instead of later. 😉

      • Ed,

        If I recall you mentioned this company before saying if it wasnt going higher its a signal the market was heading lower. Do you still believe that? When I look at the chart it seems to me it could be bought at a cheaper price in the next week or two. Given the volatility lately thats a good possibility. If the record date is not until February 12 why not wait until Feb 7-11 to decide? I agree the company has good financials, but the action lately to me doesn’t warrant a buy right now.

    • Trader – you raise an interesting point. I would love to do a study on special dividends. What you say makes 100% sense, if a stock is worth $30 and they pay a $1.00 dividend, then all else being equal you’d expect them to open at $29 the x dividend day. But looking at a few of my stocks that recently paid special dividends:
      AGX on Oct 9th for 75 cents. Closed October 9th at 21.40, closed 10/10 at 21.20.
      CIM on jan 3rd had a special divvy of 20 cents. Closed 1/3 3.14 and closed 1/6 at 3.04.
      DLB on dec 19 2012 had a $4 special dividend. This one seemed right. 12/18 closed at 35.37. 12/19 closed at 31.21.

      • Marshall, the amounts may not be exact due to intraday price movement, but the adjustment will be there.

  3. Ultimately, it comes down to “I like the company”. Actually, I’d prefer it in my 401k, but I don’t really have enough cash in it to buy at the moment. I’d like to make it a long-term hold. I may transfer it at some point.

  4. Ed, just a thought. If you have enough shares you could sell Feb 50 calls for 95-100. With that special dividend, my guess is they will expire worthless and you’ll pick up some extra cash. I know you don’t do options, but this looks like easy money to me. You’ll profit three ways if you are called out. Gain on the stock, special divi and option premium.

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