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Capital Gearing Trust discount narrows on ex-dividend day
During January and February of this year Capital Gearing Trust’s premium moved from the 1.5%-2% band where is usually sits to a discount of around 2%, where it settled during March, April and May supported by the Trust’s discount control policy with about 2.3% of shares now held in Treasury. Last week, around the day the Trust went ex-dividend, the discount suddenly closed. Was this coincidence, as I think it was? The alternative seems to be that accrued dividends are somehow stripped out of NAV on ex-dividend day causing its value to fall disproportionately to the Trust’s share price, and I cannot see how this would happen.
Comments
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Perhaps because from the ex-div date assets are matched by the liability to pay the dividend.0
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Given that the price fell >2% today maybe it was just a large buy order which temporarily spiked the price.Linton said:Perhaps because from the ex-div date assets are matched by the liability to pay the dividend.
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