When the dividend = stock price

I don’t know anything about MBI. This popped up on an internal Slack channel at work. What happens when a non-profitable company with a stock price below $10 announces a dividend of $8? This, this is what happens. All I say is “wow”.

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It has to be a one time payment. Usually immediately reflected in the stock price until the x date.

Not sustainable. Not a good investment idea.

Not familiar with the company, but it could be a way for large shareholders to grab some cash from the company before declaring bankruptcy. Of course, I believe large shareholders are upright, law-abiding citizens and that they would never do anything like that.

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Fascinating watching this play out. From the work Slack channel:

PURCHASE, N.Y., December 07, 2023–(BUSINESS WIRE)–MBIA Inc. (NYSE:MBI) today announced that its Board of Directors declared an extraordinary cash dividend on MBIA common stock of $8.00 per share to shareholders of record as of December 18 to be paid on December 22, which totals approximately $409 million, based on 51.1 million shares outstanding. The information is also available in the Current Report on Form 8-K dated December 7, 2023 available at sec.gov. The Company also announced on December 7, 2023, the New York Department of Financial Services (“NYDFS”) approved a $550 million extraordinary dividend to be paid to MBIA by its wholly-owned subsidiary National Public Finance Guarantee Corporation (“National”), and separately, on November 20, 2023 the Corporation received a $97.245 million as of right dividend from National.

They’re paying it from a dividend they are receiving from one of their subsidiaries

clever. get the subsidiary to borrow money to pay a dividend to them and funnel it to the owners

also the subsidiary has not issued any new insurance on bonds since 2017

so that business is winding down and sending money up to MBIA as stuff ages out of their books

MBIA insures municipal bonds.

I pulled up their Q3 report. Like Boeing, their equity is negative: about $1B in negative equity, vs $4B in liabilities.

Yup, my takeaway would be a shareholder of size is cashing out, before the Ch 7 filing.

Steve

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