January has been a very busy month for me as one of my long-term IT contracts switches into maintenance phase and I look for new opportunities. Hence I have not had a chance to blog about many interesting developments such as the negative article about Medifast (MED) in Barron’s magazine, the class action lawsuit against wireless/WiMax equipment provider Alvarion (ALVR) and rumors about the acquisition of mortgage lender Countrywide Financial (CFC) by Bank of America (BAC). The news has not been bleak for all the companies in the InsideArbitrage model portfolio with Suntech Power (STP) posting gains of over 46% in less than six months and our May 2007 put option in the mortgage REIT New Century Financial (NEW) almost doubling in value. I will discuss all these developments and more in the next edition of InsideArbitrage, which will be sent out to subscribers in the next couple of days.
This blog entry is about special dividends and is based on a question a subscriber asked me about the $10 special divided that Health Management Associates (HMA) declared a couple of weeks ago to ward off a private equity takeover. This subscriber felt that this $10 special dividend represented a good short-term profit opportunity and was wondering why the stock had not appreciated after the announcement.