Stuff Going On

I set a limit buy price of $6.00 on Evergreen Solar (ESLR) a few months ago, and just found out it triggered, buying 330 shares. This is the first buy in my Roth IRA account. Now I need something other than common stock in this account.

An even bigger surprise was the addition of Acco Brands (ABD) to my regular trading portfolio….because I’ve never heard of it. Apparently Fortune Brands spun off their office supplies division, so now I own 7 shares of Acco at around $26 per share.
I’m going to list this $183 as income.

I’ve got a new side business on the way, hopefully launching by my goal date of 8.28.2005. It will be a low maintenance operation once setup, but there is a lot of reading and researching to first be done on my part.

I won’t give away details just yet, but it has something to do with:

I am working on much larger projects with some business associates, making this one look like pennies. However, there is nothing wrong with having several small side incomes.

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    Blog posted on: August 19, 2005

    12 comments on “Stuff Going On

    1. Dan

      I’m not exactly sure you can post that as income.

      If part of the business was spun off into another public company (perhaps unlocking some value), the original stock should drop proportiately the amount of value as to which was transferred into the new public company. In a perfect model, factoring in transaction costs, you probably would lose value (ignoring any value gained by splitting the companies).

      That being said, investor confidence may have helped increase the stock price of both stocks, which could be considered capital appreciate. However, it appears the way you invest is more for the long run, and thus you would likely classify your holdings as held to maturity and probably should not realize an income due to the split.

      Reply
    2. Anonymous

      I am sorry to say this Neville, but after Reading your palm, without much Research, I can tell you that you will not be finishing an MBA, that you will not have much help from family and that you will not be in the business of managing a lot of people.

      On the brigher side, you can bank on your analytic skills and bet on the maxim- ‘fortune favors the brave’.

      bless you -Kevin

      Reply
    3. Neville

      Dan,
      I’m not exactly sure how to address how to classify this extra stock. I’m going to ask some accounting professionals I know over the weekend.

      Anon,
      Thanks for the palm reading :-)

      Reply
    4. muzzi

      I know another one of your secrets nev.

      I am thinking something along the lines of attractive stickers notifying people of a glass door so as they don’t walk into them…

      Reply
    5. Anonymous

      ABD is in your Roth IRA, no accounting necessary. You simply list the stock ticker and its $ value as a part of fluctuating market value of your portfolio. Nothing else to do at this time.

      Reply
    6. Anonymous

      Since ABD is in your “regular trading portfolio” and not your Roth IRA, there will be tax consequences to this spin-off.

      You will need to assisn some of the cost basis from Fortune Brands to ABD. Then you adjust the basis of Fortune Brands by the same amount.

      Reply
    7. Anonymous

      accospin-offTaxInfo.pdf

      “…Based upon the average of the high and low trading prices on August 17, 2005 of Fortune Common Stock, as
      reported on the New York Stock Exchange (“NYSE”), and of the ACCO Common Stock, as reported on the
      NYSE, (1) 93.9804% of your tax basis should be allocated to your Fortune Common Stock and (2) the
      balance, 6.0196%, should be allocated to your newly received ACCO Common Stock (including any
      fractional share interest)…”

      Reply
    8. George

      Hi Nev -

      Have you considered investing some of your Roth IRA in special situation/arbitrage stocks? I have been investing my son’s Coverdell ESA funds in stock of companies that have announced that they are going private. When the company completes their going private transaction, I get a fixed amount of cash for my shares. You can read more about this in my Coverdell ESA portfolio category on my blog.

      Reply

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