Dang and Crap! Medley Capital Pulls a Fast One and Messes Up Our Trade
Today the Medley Capital Corp. (NYSE: MCC) share price dropped by 28 cents per share to $13.01 instead of continuing higher to our target price of $13.50. As I communicated earlier in the week, MCC goes ex-dividend on Monday and the trade would close out on Market close of tomorrow Friday if the target price was not reached.
A surprise secondary equity issuance announced after the market close on Wednesday August 20 yesterday had the effect of immediately driving the share price down on the open today. With the ex-dividend coming in just one more day, there is no time for the share price to recover and move closer to the target price.
I am somewhat upset with myself, since the share price reached an inter-day high of $13.47 on Tuesday, August 19. Just three cents short of the target! The price pull back to close on Tuesday at $13.26 and the Wednesday close of $13.29 seem to indicate that there may have been some news leakage (I didn’t get any) of the secondary offer. Without the secondary, I am confident the share price would have closed out this week at $13.40 or better.
A couple of final words on this trade:
- remember to close out any open positions some time during the day tomorrow, Friday, August 22. The share price will drop by another 35 cents or so on Monday when the stock goes ex-dividend.
- also, the trade recommendation will still book as a profit, just several percent less than the target we were shooting for.