Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Clear Channel Shares Jumped: What You Need to Know

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of billboard company Clear Channel Outdoor (NYSE: CCO  ) were getting a big thumbs-up from investors today, gaining as much as 12% in intraday trading after the company announced a debt offering and a big special dividend.

So what: In a press release today, Clear Channel, which is largely controlled by Bain Capital, announced that it will be raising $2.2 billion via two debt offerings. The company will then turn around and use $2.17 billion of the proceeds to pay a $6.08-per-share special cash dividend to shareholders on record as of March 12. As the big jump in the stock suggests, the move was well received by investors.

Now what: You'll have to excuse me if I throw up in my mouth just a little bit. Maybe I'm just a sissy when it comes to debt, but the idea of a company practically doubling its indebtedness in order to pay out a massive dividend just doesn't sit well with me.

This is a move that's straight out of the MBA/private-equity playbook and may work out just fine. In fact, it may work out better than fine -- if the company views its cost of equity as high, shifting the capital mix to more debt could bring down the company's overall funding cost and be a boon for shareholders.

You can call me Foolish or perhaps just foolish, but I prefer that my returns come from investing in top-quality companies earning solid returns, not fancy leverage tricks.

Want to keep up to date on Clear Channel Outdoor? Add it to your Watchlist.

Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1798790, ~/Articles/ArticleHandler.aspx, 10/27/2016 8:53:44 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 11 hours ago Sponsored by:
DOW 18,199.33 30.06 0.00%
S&P 500 2,139.43 -3.73 0.00%
NASD 5,250.27 -33.13 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/26/2016 4:02 PM
CCO $5.75 Down -0.05 +0.00%
Clear Channel Outd… CAPS Rating: *