Too much happening

And not enought time to blog. But here's a trade I did today. I bought MCGC on Tuesday, but sold it today. It was up two cents. The reason I sold it was that I had a chance to read the analyst report that was responsible for tanking the stock on Tuesday. The analyst predicted that the dividend would be cut 25%. I decided to investigate for myself. I started by checking the payout ratio, in terms of earnings (123%) and, more importantly, in terms of operating cash flow (210%). Next, I checked the debt to equity ratio, which is 0.9. Digging through the analyst report some more, I discovered that MCGC recently had a $200 million credit line pulled.

Conclusion: I believe that the dividend is unsustainable unless the company is able to grow. Without the credit line, the company will have to cut back on the dividend by at least 20% if they want to have any cash to do any future deals.