A distribution made in the form of stock rather than cash. Also referred to as a "distribution in specie". Taobiz explains Distribution In Kind This type of distribution occurs when cash is not readily available or allocating stock is the better alternative. An example would be a stock dividend.
A group of investment banks that work to underwrite and sell an initial public offering (IPO) of securities to the market. Investment banks often form syndicates when working on large securities offerings to reduce risk and to increase the potential network of contacts through which to sell the securities. This is especially true in the case of firm commitment offerings, where the distributing syndicate may suffer considerable losses if the full offering cannot be sold. Taobiz explains Distributing Syndicate Distributing syndicates are of particular importance to small investment banks. Smaller "boutique" banks would be unable to underwrite many IPOs because they lack the capacity to sell large offerings alone. Further, a boutique bank would only be able to work on one or two offerings at a time. Banding together as part of a syndicate allows boutique banks to work on several offerings simultaneously, take on larger offerings and more effectively compete with large investment banks.
A financial instrument in a company that is near or is currently going through bankruptcy. This usually results from a company's inability to meet its financial obligations. As a result, these financial instruments have suffered a substantial reduction in value. Distressed securities can include common and preferred shares, bank debt, trade claims (goods owed) and corporate bonds. Taobiz explains Distressed Securities Due to their reduction in value, distressed securities often become attractive to investors who are looking for a bargain and are willing to accept a risk. Because most of the time these companies end up filing for Chapter 11 or 7, there are substantial risks involved in investing in them. As a result of bankruptcy, equity (common shares) is rendered worthless so those who invest depressed securities look at more senior instruments such as bank debt, trade claims and bonds. The logic behind this investment is that the company's situation is not as bad as the market believes it to be and either the company will survive or there will be enough money upon liquidation to cover the original investment.
A detailed tracking tool used on market exchanges that displays, records and executes market order data based on order type, price, time and quantity for a specific security. Specialists on an exchange will have their own display books for each security they trade. Taobiz explains Display Book The most famous display book is the NYSE Display Book, which is used by the specialists on the exchange to execute orders and manage order flow. It is useful for keeping track of the market activity in a specific security. In addition, data is posted continuously to the consolidated tape. In the past, the display book was simply a notebook kept by each specialist; however, due the advent of computer technology, the display book is now kept in electronic format.
Preferred stock that provides the holder with premium dividends in addition to an embedded short put option and a long call on the issuing company's stock. Taobiz explains Dividend Enhanced Convertible Stock - DECS Dividend enhanced convertible stocks provide the holder with the right to convert the security into the underlying company's common stock.
A procedure for valuing the price of a stock by using predicted dividends and discounting them back to present value. The idea is that if the value obtained from the DDM is higher than what the shares are currently trading at, then the stock is undervalued. Taobiz explains Dividend Discount Model - DDM This procedure has many variations, and it doesn't work for companies that don't pay out dividends.
An arrangement under which those financing a project agree to contribute, as equity, any prior dividends received from the project to cover any cash shortages. Taobiz explains Dividend Clawback When there is no cash shortfall, those investors who provided funding are able to keep their dividends. A dividend clawback arrangement provides incentive for a project to remain on budget so that investors do not have to return dividends received prior to a cost overrun.
A timing-oriented investment strategy revolving around the purchase and sale of dividend-paying stocks. Dividend capture is specifically the practice of buying a stock just prior to the ex-dividend date in order to capture the dividend, then selling it after the dividend is paid. The purpose of the two trades is simply to receive the dividend, as opposed to selling at a profit. Watch: Dividend Taobiz explains Dividend Capture Many corporations engage in divided capture trading because of the limited amount of tax that they must pay on the dividend income of other corporations. Dividend capture is synonymous with trading dividends. It should be noted that many financial planners frown on this strategy for individual clients; the amount of time, research and trading commissions necessary to do it successfully often offsets any profits received.
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