My Top Heavy Cornerstone
November 15th, 2006 by Grant in: Investing, Stock ThoughtsI was just about to write a post on how my Cornerstone (CLM: chart, Y!) stock was getting top heavy when it took a nose dive.
The share price has been climbing steadily, but only until recently has the NAV turned North. In fact, CLM is trading at a 63% premium to the NAV, which is actually starting to turn investors away in light of the healthy 11% return paid monthly.
Luckily, this recent drop in the price is becoming more and more predictable. Every month about this time, the stock takes a hit in advance of the ex-distribution date. Nearly like clockwork. This time, however, the price really took a dive.
I believe there are people getting the jitters due to the stock trading at a high premium, as well as the fact that at the end of the year, the company will report how much of their “dividends” were actually a return of capital (ROC). After all, the technicals are looking very top heavy, with the MACD and Stochs signaling an over bought condition.
Things could get interesting through the first quarter of next year, but I’ll sit tight for now and see how it pans out.
Disclaimer: I do own shares of CLM.
Additional Resources
CLM - ETF Connect
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