Q & A: Nam Tai (NTE)
What a week we've just had! The market acted with such strong conviction that I actually went against the market the last three days in my trading account. I am currently short QQQQ and hope that Monday will bail me out. The stocks are showing life but seems a bit streched. In any case, I am glad to see that my assumptions (see note dated 9/10) are becoming true. Trust me, some things in the market are quite predictable : )
I was going to write an update on NTE today. Lo behold, one of our reader sent me a question via comment section below these pages. The question itself is relevent so here it is:
Q: Anonymous said...
Yes, when i saw the XMSR upgrade i remembered what you wrote a few weeks ago. Good call!Anyways - i had a question about NTE dividends. The yield for NTE is currently listed as 12.60% on Yahoo finance. Is this accurate? And they do they pay it at the end of the year?If the yield is actually that much (>10%), then i see buying NTE now as a no-brainer. Very limited down-side (because of the safety net of the dividend). Or i am missing something here??
A: Great question and here is my answer:
That's exactly what I am trying to say! I don't understand how so many people miss such a no brainer! But that's good for us - we do our homework. Early birds catch worms first! Too many people are negative on NTE stock. That's why we get such a good deal. Allow me to spell it out for you.
1. NTE decided to cut its dividend by half next fiscal year (2007) to invest more into the new manufacturing facilities.
2. Most people took thisb news as negative.
3. As I have said before (see note dated 8/17) I think this is a great news. Who wants cash when I can get higher return by re-investing it in proven business.
4. NTE stock went higher last few days but as of few days ago you could have locked in over 10%+ cash dividend, even after the 50% rate cut!
5. NTE stock holders as of 9/27 will receive cash dividend of $0.38 per share.
6. Then in December another $0.38/sh cash dividend.
7. During 2007 you will also get $0.21/sh cash in March & June.
8. So if you assume you will hold this for a year, you will receive total cash payment of $1.18/share!
9. BTW, these are guaranteed cash payments. Money is already set aside for these payments. As you know, most other company dividends are not guaranteed like NTE's.
10. In conclusion: you get the cash of about 10% on your money in a year guaranteed / you get the company that is growing - thus the planned expansion / NTE is the survivor in this sector / NTE has higher margin than most other competitors / NTE has money to adapt to the next level of manufacturing that most customers will seek / and the shares are so cheap!
Just get in OK?
Risk/Reward ratio is beautiful. So why are the shares at these level? I will answer that in 12 months from now. Because if I tell you now, you wouldn't believe me. Please someone mark this note and remind me a year from now ...
P.S: I have gotten in touch with friends that I have lost contact through this blog. They somehow get into this site and find me. How do you just stumble upon my site? Do you surf the net that much? I have no clue. But I am glad that I am reaching my old friends. The last one was a fraternity brother from my college days. Just so you know, I was a Teke (TKE) and I was the president of my fraternity. My auto-license plate in college was " TKE-CEO". And guess what I watching in my frat house living room during the lunch time? Yep - CNBC market news, of course. Everyone wanted to watch the ESPN but they knew not to mess with my TV...
Ahhh... how I mis the college days....
I was going to write an update on NTE today. Lo behold, one of our reader sent me a question via comment section below these pages. The question itself is relevent so here it is:
Q: Anonymous said...
Yes, when i saw the XMSR upgrade i remembered what you wrote a few weeks ago. Good call!Anyways - i had a question about NTE dividends. The yield for NTE is currently listed as 12.60% on Yahoo finance. Is this accurate? And they do they pay it at the end of the year?If the yield is actually that much (>10%), then i see buying NTE now as a no-brainer. Very limited down-side (because of the safety net of the dividend). Or i am missing something here??
A: Great question and here is my answer:
That's exactly what I am trying to say! I don't understand how so many people miss such a no brainer! But that's good for us - we do our homework. Early birds catch worms first! Too many people are negative on NTE stock. That's why we get such a good deal. Allow me to spell it out for you.
1. NTE decided to cut its dividend by half next fiscal year (2007) to invest more into the new manufacturing facilities.
2. Most people took thisb news as negative.
3. As I have said before (see note dated 8/17) I think this is a great news. Who wants cash when I can get higher return by re-investing it in proven business.
4. NTE stock went higher last few days but as of few days ago you could have locked in over 10%+ cash dividend, even after the 50% rate cut!
5. NTE stock holders as of 9/27 will receive cash dividend of $0.38 per share.
6. Then in December another $0.38/sh cash dividend.
7. During 2007 you will also get $0.21/sh cash in March & June.
8. So if you assume you will hold this for a year, you will receive total cash payment of $1.18/share!
9. BTW, these are guaranteed cash payments. Money is already set aside for these payments. As you know, most other company dividends are not guaranteed like NTE's.
10. In conclusion: you get the cash of about 10% on your money in a year guaranteed / you get the company that is growing - thus the planned expansion / NTE is the survivor in this sector / NTE has higher margin than most other competitors / NTE has money to adapt to the next level of manufacturing that most customers will seek / and the shares are so cheap!
Just get in OK?
Risk/Reward ratio is beautiful. So why are the shares at these level? I will answer that in 12 months from now. Because if I tell you now, you wouldn't believe me. Please someone mark this note and remind me a year from now ...
P.S: I have gotten in touch with friends that I have lost contact through this blog. They somehow get into this site and find me. How do you just stumble upon my site? Do you surf the net that much? I have no clue. But I am glad that I am reaching my old friends. The last one was a fraternity brother from my college days. Just so you know, I was a Teke (TKE) and I was the president of my fraternity. My auto-license plate in college was " TKE-CEO". And guess what I watching in my frat house living room during the lunch time? Yep - CNBC market news, of course. Everyone wanted to watch the ESPN but they knew not to mess with my TV...
Ahhh... how I mis the college days....
posted by Jaewoo | 7:51 PM
3 Comments:
Nice. That was just the confirmation post i was waiting to read before buying into NTE :)
Are you planning to add more of NTE in the AceTrader portfolio? I am not mistaken, it is currently one of the smallest holdings at approx. $9K value. I will be loading up over the next week.
-Joseph
NTE@12 is a safe one. good call.
Likewise, have been watching NTE since you brought it to my attention. Have had a bundle of cash with its name written all over it - time to put it to work :)
Good call on XMSR - I hope your predictions of future upgrades prove accurate.
Keep up the excellent blog!
Sonderval, Ireland.
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