Out of KNM today
I have been making movements only rarely lately, but I exited my KNM position and I wanted to write a bit about why.
I've been a long term shareholder and bought it first in 2005 when I encountered Metal Gear Solid 2: Sons of Liberty and was just blown away by the game and the experience. I was just learning balance sheet and income statement analysis at the time and I was probably most impressed by the fact that Konami is run by its founder-CEO and had a cult following for Hideo Kojima, its Yu-Gi-Oh! franchise, and so on.
Konami is very conservatively run and its dividend yield averages 2%. I caught it at 30, sold it at 42 in 07 or thereabouts, bought it back at 30, and it promptly dropped to 20 and stayed there for the past 4 years, so I collected 4 years worth of dividends and DRIPped them at the depressed price.
In the past couple of months the stock price has nearly doubled, from 19 to 37 today. I cannot get any clarity on why this has happened. There seems to be nothing in terms of sales figures, product announcements, or quarterly reports to justify it. In addition, the last two semiannual dividend payments add up to 33% less than the two payments before it - there's been a 1/3 dividend cut, in other words - bringing the dividend back down to its 2004 levels.
I've been bad in the past at pulling out the flowers and watering the weeds. But in this case today I note something happening that I don't understand, and as I said before in this space, "If there's one thing I've learned from CAPS, it's that if you don't understand it, take your money far away from it."
Konami could be gearing up for an acquisition or something, but I can't read the Japanese press and I can't get the information I want, so I opted to sell my shares here. (Of note, even though I hold the KNM shares in a Roth IRA, I end up paying significant Japanese taxes on the dividend, plus a fee that my brokerage takes for calculating and withholding the tax -- something I didn't know when I bought the stock.)
I rotated the entire stake into AT+T at 29.56 for a dividend yield of 5.8% and a potential long-term benefit from the T-mobile acquisition.