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... as per my earlier post .....£1.08 has been breached and it looks and feels like it's going to head below £1 now .....and I'm hoping 96p will provide some support.
However - stock markets are looking like they might fall in October and I fear we could be heading back towards the 80s (last seen in the depths of Covid).
This is not a stock that does well in a bear market / recession though and with a NAV of £1.80/share ... Looks to be a fabulous investment at these levels!
GLA
My understanding is you needed to be a holder at close of play on Friday to qualify for dividends which will be paid later in the year. There is always a share price drop the following trading day as people who have stayed in purely for the dividends exit.
@TraderBuckie - but the dividend was only 0.85p per share - which goes no way to explain the share price destruction here.
The rot set in when the management announced they were going to float (rather than sell) the automotive business.
The consequence of this decision is that Melrose will be split into 2 separate entities BOTH of which may not be large enough to gain entry or remain in the FTSE 100.
So ....lots of institutions bailing before the split ....is the way I read it. And that's why it looks like we may head into penny share territory.
A rare mistake from a, usually, very astute management team
You’ve got to be brazen to assume it’s the divi that’s done this
I’ve taken a position here late doors today so expect further falls - sorry about that.
The divi has not accounted for the overall slide......but the day after is ALWAYS a down day, no matter what stock or what the market conditions are.
Not always but I get your point.
@Jax05 - I think you will do very well, in time, with a £1.05 or less average here and that will be a lot less than the majority writing on this board (including me).
The debate for LTHs is 'how long to wait before averaging down '
TB, "but the day after is ALWAYS a down day, no matter what stock or what the market conditions are"
Do you have evidence to support this ?
There isn't any evidence to support this.
It is OFTEN down ....but not ALWAYS .. and by way of example check the share price movement of Barclays on the 12th August - the share price rose on that day even though a 2.25p dividend was declared.
I suspect that it's more a case of there being little prospect for a trade sale of the GKN components in the forseeable future that has driven Melrose down the demerger route.
Aerospace is also likely to carry a higher rating / p/e ratio than automotive - so the demerger may enable better shareholder returns for that business, free of any "drag" from the rest of Melrose.
As other posters have indicated, possible recessions are never good for the business's that Melrose takes on. But I suspect the fall is also driven by the likely time it will take to complete the demerger - sell now to pick up on other investment opportunities over the next few months while Melrose does all the lengthy work it needs to.
Owl....."TB, "but the day after is ALWAYS a down day, no matter what stock or what the market conditions are. Do you have evidence to support this ?"
Yes, send me your address and I will forward all my data to you. Or you can do your own research and you will find that this is a very common situation.
"After a stock goes ex-dividend, the share price typically drops by the amount of the dividend paid to reflect the fact that new shareholders are not entitled to that payment. Dividends paid out as stock instead of cash can dilute earnings, which can also have a negative impact on share prices in the short term."
TB, I agree with that comment.
It was your previous comment that I didn't agree with,
ie " There is always a share price drop the following trading day as people who have stayed in purely for the dividends exit"