Isn't That Special?

One theme this late fall has been special dividends. This is generally the season for special dividends, but they have been far more numerous due to the perception/fear that dividend rates will escalate in 2012.

One interesting phenomenon, has been that stocks announcing these special dividends have generally gone up upon the announcement. On a pure book value basis, this does not make sense as if a company pays all the share holders a buck, the book value of the company is a buck lower. It really has not generated any value.

I guess that is saying that we as stockholders can find a better usage for the cash than the company. Not su that is exactly a vote of confidence in management, but I get it, as a general fear is that a company will do something stupid with excess cash.

In the past two days, I have had two companies announce special dividends, SLCA and DLB. SLCA is up about eight percent on the announcement and Dolby is up four or five percent today. It is a way of unlocking value in companies I have bought ( in part) due to their strong cash positions. Wonder if there will be any more?  The window is probably closing as it needs to be paid before year end.