Buckling

Buckling

Frequent readers of my Blog know I have had my share of ups and downs with BKE.  This is a mall retailer, a much hated class, that has impeccable financials; but also impeccable declining sales per store.

My best buy of them was 8/16/17 when they dropped under $14.  Heck they have over $5 per share in cash and were earning $1.70+ per year.  $14 seemed like a little too much of a markdown. 

I was right (for once) and now they are at $22.  But I am not here to talk about that buy.  I am here to talk about special dividends.  BKE pays a regular quarterly dividend of 25 cents.  That alone give you a very snappy 4.6% yield.  But BKE also occasionally pays a special dividend as they just have so much cash and they are not growing.

So tomorrow they go x dividend at a very sweet $2 payout.  Now, in my view (keep in mind just a guy with a spreadsheet), the market should be agnostic to this.  You are just getting $2 per share, but BKE will see their stock price drop by $2 (or it should) tomorrow.  Also, the fact they declared a special dividend should have already been kind of baked in, if we make assumption that markets are efficient (which I doubt more and more every single day).

But what actually happened?  After announced 12/5, the stock went up 12/6 by almost 5% to 22.70.  The stock continued to rise through January 3rd to $24.55.  I think that $2 rise was pretty much just overall euphoria about retail around Christmas... everyone was saying it was a good Christmas.

Then 1/4 BKE announced their December sales and they were again uninspiring.  The price slumped to $20.90 the next 4 days.  I guess that makes sense, December is an important month.

Today though, they went back up 6.7%!  Is that because they over-sold or because investors (or perhaps people who don't understand dividends) want to capture that $2 special dividend tomorrow?

Very Interesting

What do my readers think?  Why did BKE bump up so much today, a day before the special dividend?