Quick Update & Explanation on What Happened to $ZIM AFTER the $17 per Share Dividend Payday on April 4th
Hey Subscriber,
So yea, I have done the investment newsletter/mutual fund and hedge fund management and individually managed accounts thang since 2000...been associated for/working for Wall Street firms since 1979--and the $ZIM meltdown was something I have never seen.
In our early ChangeWave Research days, we owned Canadian Royalty Trusts that had a 10% dividend withhold clause--but you could email a form to the royalty trust, and they would release the dividends because of the US/Canadian tax treaty adopted in 2004. It was a slight pain but no whoop.
And then, like now, you could always write off the withheld dividend as a tax credit against your taxable income.
In other words, "when a foreign tax is withheld on dividend payments, you're entitled to a tax credit or deduction if the same dividend income is taxable by the U.S. You get back the amount withheld by the foreign government when you claim a credit equal to the foreign tax on your U.S. income tax return."
BUT--Isreal? Really? Gotta say--never heard of Isreal withholding dividends paid by Israeli companies listed on the NYSE to American shareholders--until we got our $17 dividend deposited into our master managed account on April 4 that was 25% light of $17.
Anyhoo...apologize for missing that little detail!
But, with the pullback from $76 to $56 in a few days, I was not the only one to miss this little detail (grrrr).
The only good news here is that
1) Obviously many retail investors (and some hedge funds I am sure) saw the $17 Q4 2021 "catch up" regular dividend and said "OK...I'll buy shares one day before ex-dividend (March 22), own it to the day of record (March 23), and many sold the shares EVEN though it was not a "special dividend" but a regular one.
On March 24, it sold off a bit but not much.
But when the $17 dollar dividend hit on April 4 minus 25%, a whole bunch of sell stops must have hit PLUS confused investors (like your truly) who had protective sell stops hit and put options hit too.
The chart tells the story--the $17 divvy date of record (the date you had to have it in your account), the ex-dividend date (the date the latest dividend would NOT be paid), and the shock and awe day April 4th
What to do?
Well..since the CEO pledged to maintain paying out 50% of their annual cash flow for the foreseeable future in a dividend (with a 4th quarter "catch up" big divvy to hit the 50% quota), and since this is the low season for container shipping (QTR 3 and 4 are the Christmas Season heavy shipping season), I'd LOVE to buy ZIM shares at the 100-day moving average (which has been the strong support for 6-9 months) in TAXABLE accounts.
Let's see what the stock Gods give us over the next few days--BUT with $39.93 or earnings per SHARE and P/E of 1.48--- and Shanghai soon to get out of lockdown (Shanghai is a big port for $ZIM), I'd buy SOME tomorrow at the open if it rises--but I would buy an entire "unit" (unit is the $ amount of your average position--with a $500,000 portfolio we do 2% as our "unit" base case and 4% overweight for opportunities we are REALLY excited about) if it still falls.
Net Net: Anywhere near the $52 100-day moving average would be a gift from the stock gods--they traditionally pay $2.50 in quarterly dividends and then they pay the BIG one for Q4 2022--in Q4 2021 it was $17.
Let's just spitball here and say Q4 2022 is $12.50--add $7.50 and that is $20 a year in dividends. Say you get it at $55--that is 36% in dividends--dude that is buying $USAC at $6 type dividends (the $5 withheld pays part of your tax bill...that is cash money).
Needless to say--the ONLY way to buy $ZIM is in a taxable account--otherwise the dividend withholding is not deductible as far as we can tell--I am getting tax attorney advice on that issue.
Risk? In the short term not much.
Our Macro Market Timing Index IS close to calling a US recession in 2023...if we move below 15 on our index for 4 weeks, that will mean recession coming in 4-6 months...aka 2023.
BUT--know that we know how to play the $ZIM game--we can use put options to fix our downside and sell call options to generate more income (yet another reason I want ACTIVE investors in the All-Access Discord room--just today, $1000 in our $SQQQ options short the QQQ from yesterday paid 2 years of the subscription...our 2X short $RSX Russia play was 11X our $1k investment).
The Fed
Look the WORLD and the stock market have been bi-polar waiting for the Fed's forecast and Ukraine news.
NOW we have the Fed's plan-- and now our MacroMarket index says we have at least a 75% chance of a recession in the United States by Q1-2 2023--and 100% chance in Europe right now.
On the All-Access blog today I posted about the trench warfare that is the equity and bond markets for the foreseeable future have become (think the 1917 movie!)
"Close the SQQQ call option (short the QQQ going into Fed Day) and take the 110% profit...hold the $ARKK put option as it is rolling over after its bear market rally off WAY oversold conditions.
Now let me be as clear as I can--with what the Fed's uber hawking statement today, $90 BILLION of their balance sheet will be sold every month for--I don't know--until the white of the eyes of a recession in 2023 is staring at JayPO.
In the meantime, we are up 40%+ in our 75% UI and 25% Ultra Growth portfolio allocation--and prolly more by the time we add up the dividends that hit our accounts in Q1.
Action to Take: We will be likely taking profits in Ultra Growth stocks--stay tuned.
ALL UI and UG spreadsheets are updated with Buy Under prices...thanks Gary!