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Sunday, November 11, 2012

Héroux-Devtek Inc. (HRX) declared a special dividend of 5 bucks per share

Looking to make a quick and easy $500? I may have exactly what you need.

I didn’t know about this company until 5 minutes ago. It’s quite a benefit to be bilingual. I just completed the reading of an article of La Presse published online. You can read it here. In that article, we learn that Héroux-Devtek Inc. (HRX) occupies the third rank in its industry (f landing gear systems), that the company did very well lately and that, best of all, the board of directors had decided to be extra generous, maybe even too generous, by giving away $5 per share in special distribution.

Being a business owner, I wouldn’t be that generous. But what the heck, Quebeckers can be sooo strange with no logic at all and I think they are more than well-known for their extremely poor judgement. And we, ladies and gentlemen, the very bright Canadians, its our duty to take advantage of the stupidity of our enemies. Just go for it.

So here’s how to make a quick $500: Invest in 100 stocks Héroux-Devtek Inc. (HRX) at least 3 business days BEFORE November 20. I recommend investing in Héroux-Devtek Inc. (HRX) by November 14 the latest. I highly recommend contacting your broker in order to not to mess out with the deal and just to make sure that November 14 is a good date to qualify for the special dividend. The date you invest in HRX is super important; it will determine if you qualify or not for the special dividend.

Am I going to invest in Héroux-Devtek Inc. (HRX)? Well, you must know me by now, special dividend is kind of being my thing and yes, of course, I am going to invest in Héroux-Devtek Inc. (HRX), a company that decided to blow their money in the hand of their investors by paying a terribly high $5 per share.

I don’t know if you are getting it at this point, but this is how to make an easy $500. Here’s the trick: invest in 100 shares Héroux-Devtek Inc. (HRX) by November 14 (that date need to check with your broker PLEASE), hold the investment until November 21. You ABSOLUTELY need to hold Héroux-Devtek Inc. (HRX) the whole day on November 20. That’s super important. If you want to quickly sell Héroux-Devtek Inc. (HRX); that will have to wait until the morning of November 21. 

Following what, on December 19, you’ll received a fantastic $500 in cash! This is super important: if you have an automatic DRIP for everything that you have in your account, follow the following. Following the purchase of your 100 stocks of HRX, once the purchase operation is completed, call your broker and ask them to remove the DRIP exclusively on the title of Héroux-Devtek Inc. (HRX). Why? If you don’t do so, the 500$ earn in term of special dividend will simply roll over and DRIP. And trust me you don’t want that to happen because between you and me, you are in EXCLUSIVELY for the cash, not for extra shares!

Christmas is coming and an extra $500 is just what I need to pay my bus ticket Montreal-X town in New Brunswick and for a few gifts for my old folks.

Got it now? LOL. This is how to make easy money on the market. The Héroux-Devtek Inc. (HRX) title appears to be quite volatile. I will try to sell off the investment as soon as possible by setting an automatic sell order. 

WARNING: be aware that things could get complicated and you could get stuck with Héroux-Devtek Inc. (HRX) following November 20, even if you set up an automatic sell order. Problem being that starting November 21, HRX could trade at a lower value than what you actually paid the investment for. See what I mean? That’s part of the game.

You know my financial situation. I am 100% investment. I do not hold cash. I live paycheck per paycheck and I actually have a balance of $2 700 on my American Express at 0.99%. That 0.99% was a special offer that’s going to expire on December 7. 

Just to make it shorter: I don’t have fresh new cash available.

However, I have an option. Now that I have a permanent job, I could possible asked TD Visa to increase my limit to $10 000. That will give me room to transfer the $2 700 I have on my Amex over to TD Visa. The best part being that TD Visa currently offers me 1.9% on credit card transfer. Kind of nice, isn’t? So if that work, I am going to invest in 100 stocks of Héroux-Devtek Inc. (HRX) following (this week is payday at work). If my plan doesn’t work, I am only going to invest in 50 shared of Héroux-Devtek Inc. (HRX). 

And to tell you the true, I feel much more comfortable going on with a 50 shares rather than 100. But between getting $250 or a free $500, I prefer the free $500, thank you. Free money is never enough.


Anonymous said...

Sorry to break it to you Sunny, but your plan is really idiotic. The special dividend is based on a deal the company made on July 17. At that time the share price was about $8 and now it is about $13. That's where the $5 they'll be paying shareholders is coming from.

If you buy the stock now you're just paying a $5 premium for the dividend up front because you'll have to pay $13 (or more) for an $8 stock. Stock prices always fall by the amount of the dividend following the cutoff date.

To actually profit from this dividend you would have needed to buy the stock at $8 back in July before the deal was announced. Did you really think people just arbitrarily give away free money? Why weren't you trading all dividend stocks this way if you thought it was this easy?

Anonymous said...

Sunny, once the stock goes ex-divdend it will drop in price by $5 so you are not really making $500

roman said...

No quick and free money.You buy it now for 13.5 and after November 20 it will drop to 8 or 9 where it was before July. Not a good game at all.Just my opinion,good luck.

Unknown said...

Very interesting blog you have. Thank you so much for sharing. I noticed Corby's will also be making a special dividend. I see its already in your portfolio. I've been wanting to buy it but it just keeps going up these past few months.

Anonymous said...

Sunny, you never learn. Don't you remember the last time you bought SII for special dividend, you paid close to 10$ and now it's worth less than half. You should concentrate on the stocks you own now that keeps cutting their dividend. Remember when CFX suspended their dividend, I warned you about DGI and others; well, DGI just announced a dividend cut. You need to invest in companies that grow their dividend, not cut them like DGI and CFX.

Anonymous said...

I am not sure where you getting those dates from?

As the amount of the special distribution exceeds 25% of Héroux-Devtek's current stock price, the Toronto Stock Exchange will require that the shares trade on a "due bill" basis from the opening of trading on November 16, 2012 to the close of trading on the Payment Date. This means that sellers of shares during that period (i.e. sellers in trades settled after the Record Date and entered into on or before the Payment Date) will also sell to the purchasers their entitlement to the special distribution. The shares will commence trading on an ex-distribution basis (i.e. without an attached "due bill" entitlement to the special distribution) from the opening of trading on December 20, 2012.

pattirose said...

OK, I'm in for 200 shares and $1000 extra cash for Christmas!
The company looks okay even if I get stuck with the shares for awhile, people are saying they might start a regular dividend.
(I'm a gambler at heart, lol!)

Maybe we'll get lucky and hear from Susan Brunner on this stock, I'd love to see her write it up.

Sunny said...

Hi Pattirose!

I am kind of a gambler too...

True, the stock could fall at less than $13 once the $5 special dividend is paid off, I am aware of that, I wrote a warning about it, didn't I?

I am aware of the risks involved. I am simply in for the excitement for it.

Fact is, HRX is the third player of its industry. They are well established and everything relates to airplane is kind of well established in Quebec.

Also, Desjardins target HRX at something like $18 or so.

I see 6 analysts buy for this stock and one hold as actual rating, so its quite good.

I invested in only a bit more than 50 stocks of HRX and I am very happy about this new investment.

I am always kind of shock to see that there's people or zombies reading my every words.

Remember my investment in SII to get special dividend? Me too! I enjoyed the dividend and I am waiting for SII to go back to $10 per share. Will it ever happen again? Will SII ever reach $10 per share? We'll have to live to find out.

Its all about the investment game baby.

Sunny said...

Hi Nolan,

Corby is a Derek Foster stock. Invest in it now because the stock will simply continue to grow and grow and you'll never be able to catch it at a low price. See what I mean? Invest in Corby now and boost that baby of min with your fresh cash.

Good luck!

Anonymous said...

Hi Sunny/et al..

Heroux-Devtek is also thinly traded(an avg of about 200,000 shares change hands every couple of days or so. Also you have to keep in mind that if the stock doesn't increause in price after it's ex div date or if it just trades in the $8-$10 range then you havn't really made/lost any money. I can think of better places to put my $$$$. But tanks for the suggestion.


Anonymous said...

Your SII example is to show you there's no such thing as easy or free money.

Like it was said here, HRX has went up in the last few months because the special dividend was expected. When the dividend is paid, expect the stock to go down by 5$ if not more. It only make sense has the company will be worth less because it has that much less cash on hand.

"Cameron Doerksen of National Bank Financial lowered his rating to sector perform and cut his target price by 50 cents as shares have appreciated 31 per cent since July. His new target is $15 including $10 for the business and $5 for the dividend"

That means his price target is 15$ right now and it's trading at $13.10. Once the dividend is paid, the price target will be $10 and will more than likely trade at around 8$. So basically the dividend will be paid with your own money and you will need to pay tax on part of that dividend. I fail to see how that is a good deal.

The winners will be the CEO's and big investors like Caisse du Quebec. They will be getting cash payments of over 20 million and will still own all their shares. Remember these shared they own was only worth 8$ a few months ago so even though the price goes down to 8$, they pocket the 5$ in cash. For you to buy now, you have to pay 13$ and it will only be worth 8$ after dec 20 so you don't pocket anything.

I urge others to do their research before following any advise from this so called financial blog.

Anonymous said...

Like above said, the biggest winner are the CEO of HRX and other investors who bought this stock at $8.00 or lower a few months ago. Now is $13 something, there will be $5 dollars deducted from $13 and being $8 again after paying five dollars dividend. That means those investors and their CEO, the cost is $3 only after taking the dividend $5.
If you buy it at$13 now, that means you pay $5 at your own money.
Do you make sense ?


Anonymous said...

Well you sold me! I'm in for 50 shares. Let's hope this works out for us.

Anonymous said...

Really bad move. You are in the range of $125000 for looooong time.

Anonymous said...

Pattirose, you shouldn't be so quick to follow; just look what happened when you followed and bought DGI. It's trading at 2$ and cut their dividend. If you could get free 5$ dividend, HRX would be going up and not down as it has been in the last few days.

Anonymous said...

I thought investing and dividends was a slow a patient game. Is that not how you got here in the first place? Do the research, plant the seed and reap the rewards... You need to regain your focus. makign money in the morkets takes time. Rushing it only leads to "timely" mistakes which can cost a fortune over a lifetime.

Anonymous said...

agreed with all the anonymous posts. sunny is hooked on the big dividend amount only and doesn't realize that she's paying higher taxes to earn nothing in the end. you will have an instant capital loss and it may takes many years to get it back from 8 to 13 dollars... or even never in your lifetime...

Anonymous said...

sunny doesn't think clearly. there's no gamble here. if you like the stock, buy it after the dividend payment. you will get the stock for at least 5 dollar cheaper... if you buy it before, the company is basically returning your money and you will be paying taxes on it for no reason at all.

Anonymous said...

you will lose this game. no free money. if it was everyone will be buying gazillions shares just like fact all life savings if it was that easy.

Sunny said...

We'll see how it goes.

I invested less than 1k in HRX, nothing to worry much.

Interesting fact: TD Waterhouse is giving a margin loan value of close to 50% to HRX. This is a good sign and play in favor of the stock.

Like any other stock, HRX is volatile. This one is a hard player. 5$ per share was too appealing for me. The trick is to hold for now and sell later on.

Enjoy the free cash in the meantime.

Anonymous said...

This has nothing to do with volatile, it's about what the business is worth. If a business is worth 100k and has 50k in cash, the total worth of that business is 150k. Let's say there's 10,000 shares, they would be worth 15$ each. If the company pays out a special dividend totaling 50k, the business is now only worth 100k as there's no more cash left. If you divide the 10,000 shares, your shares are now only worth 10$. It's that simple.

Anonymous said...

Another one of your dividend stock is in danger, this time Just Energy. Paying over 100% in dividend; will need to raise debt at expensive rate to continue paying or a dividend cut will occur next year. The 14% yield is telling you something....
Are you going to buy some more?
Do you see now why Derek Foster changed his investing strategy and invest mostly in large US companies that have been paying increasing their dividend years after years.

Anonymous said...

This dividend can make you a profit even if the stock goes down by more than $ 5 on the ex dividend day.

The way to play this is simple. If you have in your portefolio a stock that have appreciated in value by $ 5, like Telus, BCE, Roger etcetera, sell that stock, you will realize a taxable capital gain of $ 5. but there will be no tax on that profit, if you sell Devtek Heroux at a loss of $ 5 after the ex dividend date.
You still have to pay a tax on the dividend of $ 5, but that tax is minimal, because you will receive a dividend tax credit.
In ordre not to loose money, the stock of Devtek Heroux must trade at $ 8 or more on the ex dividend date, which is very likely, because this company is well run and have a good reputation.

I did this in my RRSP account when Sear's Canada distributed a big dividend of $ 3,50 on June 25th 2010. It worked as planned. Cashed the dividend and sold the stock the same ex dividend day, with a small profit of $ 100,00.
Maybe Sunny had this idea in her mind when she got exited.

not working said...

you should thank me

Anonymous said...

Initially the date of record was November 20th for payout on December 19th. Can anyone understand what is meant by the pressrelease from yesterday? Has this changed?

Sunny said...

I know!!!! This Quebec company seem to be all fuck up. LOL!!!

They win a very good contract recently... Anyway, we'll see how it goes.

What I understand is the following: December 19 is the closing date to be eligible for the special dividend. which mean you have to invest 3 business days before the 19 of December to be eligible. Which mean you have until December 13 to invest in HRX in order to be eligible for the special dividend.

But hey, whenever your asking yourself those kind of questions, your broker will always be the best source of info. Just call, write down the time and date you call, as well the name and ID number of the broker and they will have just no choice other than to give you the correct info.

Good luck.


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