1. Commonwealth Bank is about to pay a fully franked dividend of 98 cents per share. What is the last date I need to buy shares to get this dividend? Is the ‘record date’ relevant?
Ignore the ‘record date’. The key date is the ‘ex-dividend date’, which is Wednesday 19 August. You need to own the shares before this date. So, if you buy the shares on the ASX up until the close of business on Tuesday 18 August, you will get the dividend.
Also, all things being equal and assuming no other influences, the CBA share price on 19 August will be about 98c lower than where it closes on Tuesday 18 August.
2. What are your thoughts on packing company Orora (ORA)? Most of the analysts are rating it as a hold. ORA has paid a hefty dividend. Is it a buy?
I don’t mind Orora, but it is not doing much and unlikely to be re-rated in the short term. It reports on August 20, but hopes aren’t that high.
According to FN Arena, there are 6 neutral recommendations, 1 buy recommendation. The target price is $2.69, some 13% higher than the last closing price of $2.38.
The dividend payment was a “one-off” do with a divestment and a way to distribute franking credits – it won’t be repeated. Analysts forecast a full year dividend for FY21 of 11.3 cents. Hold.
3. I wonder if you could explain the short position table published in the Saturday Switzer Report. For example, what is the weekly percentage – percentage of what? And is a +ve or –ve weekly change number a sign of the shorted stocks with the potential price to come down?
The short sales report shows the most shorted stocks by the percentage of shares shorted. That is, if a company has 100m ordinary shares on issue and 15m are shorted, its percentage of shares sold short is 15%. We show the top 20 companies on this measure.
What does it mean? If a company has a large percentage of shares shorted, that means that there are professionals saying that the company will underperform. They are not always right – and not always saying that the price will go down. Sometimes, professionals short one company against a long position in another company. For example, if they think Westpac will outperform NAB, they might be long Westpac, short NAB shares. That way, they take out any “banking industry risk”.
Most companies usually have some short positions (due to natural hedging in the options market and other factors), but it is the bigger ‘relative’ positions that are interesting – and that’s why we rank them by percentage of shares shorted.
Positive and negative movements? This shows movement over the last week. A –ve change means the short position increased, a +ve change means the short position decreased and the percentage of shares sold short decreased. Movements indicate net short positions being opened (-ve), or net short positions being closed (+ve). Direction is important because it indicates what the professionals are doing. It is also worth pointing out that some of these short positions can last for years…so when positions are changing becomes useful information.
As I have said a number of times, short sales data is “just” information. But these professionals wouldn’t be in business if they didn’t get it right more often than they get it wrong, so if you’re long a stock with a big short position, reconfirm that you want to own it.
4. What are your thoughts regarding the WAM Microcap (WMI) share purchase plan? I have held the LIC since the IPO.
Portfolio performance is ok – it is ahead of its benchmark (although unlike industry practice it does not adjust for management fees).
The only problem I have with the share purchase plan for WMI is that you won’t know the purchase price until 14 August, and then it is based on the 31 July NTA (net tangible asset value). Why it takes so long to publish the NTA I don’t know – well behind industry standard – and then you will be investing based on a price from some weeks back. However, the ASX price has now gone up and all things being equal, you will probably invest at a price below the current market price. You are not, however, guaranteed to invest at a price below the then current NTA.
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