Q: I can't fully understand the current sell-off and downgrades of TRP. I understand the selling of assets as a bit of a disappointment, and perhaps the split creates a bit of uncertainty (?) For a long term dividend investor though, is a near-8% dividend not a great opportunity? It appears that there is a lot of insider selling, is that correct?
5i Research Answer:
Insider selling has not really been material in the past six months. In terms of the price, the asset sale and split has created investor uncertainty, which never helps. But, many analysts were disappointed in the sale proceeds, and expected a higher value. While the deleveraging should ultimately be good for valuation, the short term has been weak, and it has been hit with some broker downgrades. Essentially, investors are frustrated. Now, this can indeed create opportunities, and the split we think is ultimately the right thing for the company to do. It is just going to take some time. With recent comments on the dividend, we do not believe the dividend is in jeopardy, so one does get paid to wait here.