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A popular Wendy's commercial in the 80s made famous the question: "Where's the beef?" Good one. And here's an even better one: "Where's the alpha?" You might want to whip this one out the next time you meet with your portfolio manager.
Alpha is the over-and-above-the-expected return. It is the "value added." Therefore, it makes sense that a positive alpha means an investment has outperformed its market-predicted return, while a negative alpha would mean just the opposite. The expected return is calculated by a formula that takes into account the investment's level of unavoidable risk (aka beta).
Ever stepped into an elevator and after the doors close you become aware of an almost-suffocating scent coming from the woman next to you who must have bathed in perfume? Well, as you know, once the doors close you can't escape the smell until the ride is over. This is similar to beta, which is risk that can't be reduced or diversified away. A measure of "systematic" or market related risk, beta is used as a measure relative to a certain index -- such as the S&P 500.
So, for example, let¿s say your portfolio is managed to compete against the S&P 500. If you generate a better return than the index while not taking on added risk (standard deviation of returns) then you get alpha. Low beta means the market-related risk is low and vice versa for high beta.
Another example, let's say a mutual fund or stock has a beta of 1.5 relative to the S&
P500 ¿ that means it is 1.5 times as risky. So, over time, if the S&P 500 goes up 1%, your portfolio should be up 1.5%
plus (one can hope) some percentage of alpha. If the S&P 500 is down 1%, your portfolio should be down 1.5%.
Alpha
and beta are based off of linear regression of a set of data. Warning: this may cause a high school fifth-period flashback,
but it will be over before you know it:
The equation for a line is Y = a + bX.
a = alpha (the Y intercept - the added
value)
b = Beta (the coefficient you multiply X by)
X = S&P 500 (in this case)
Y = your portfolio
Home / Markets / Industries / Industrials
Monday, May 12, 2008
Rocky Mountain Dealerships Inc. Board Approves Dividend of $0.045 per Common Share
Comtex
CALGARY, May 12, 2008 (Canada NewsWire via COMTEX News Network) ----(TSX:RME) - Rocky Mountain Dealerships Inc. ("RMDI" or the "Company") today announced that the Board of Directors of RMDI declared a dividend of $0.045 per common share on the Company's outstanding common shares. The common share dividend is payable on June 30, 2008 to shareholders of record at the close of business on May 30, 2008.
This dividend is designated by RMDI to be an eligible dividend for purpose of the Income Tax Act (Canada) and any similar provincial or territorial legislation. An enhanced dividend tax credit applies to eligible dividends paid to Canadian residents.
Management intends that dividends are to be paid hereafter on a quarterly basis subject to performance and at the discretion of the Board of Directors of the Company.
About RMDI:
RMDI sells, rents and leases new and used construction and agricultural equipment, including Case Construction and Case IH Agricultural brands, as well as offering product support and finance and insurance products to its customers. RMDI represents one of Alberta's largest agriculture and construction dealerships with 13 dealership branches located throughout Alberta.
Additional information on RMDI is available on our website at www.rockymtn.com and on SEDAR at www.sedar.com. The Common Shares of RMDI trade on the Toronto Stock Exchange under the symbol "RME".
Forward Looking Information
Certain statements contained in this press release, including statements related to the expectation that the Corporation will continue to make quarterly dividends and statements that contain words such as "could", "should", "can", "anticipate", "expect", "believe", "will", "may", "likely" and similar expressions and statements relating to matters that are not historical facts constitute "forward-looking information" within the meaning of applicable Canadian securities legislation.
These statements are based on certain assumptions and analysis made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances. However, whether actual results, performance or achievements will conform to the Company's expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results to differ materially from the Company's expectations. Consequently, all of the forward-looking information and statements made in this press release are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the Company or its business or operations. Except as may be required by law, the Company assumes no obligations to update publicly any such forward-looking information and statements, whether as a result of new information, future events or otherwise.
%SEDAR: 00026106E
SOURCE: Rocky Mountain Dealerships Inc.
M.C. (Matt) Campbell, Chairman and Chief Executive Officer; Brian Taschuk, Chief Operating Officer; or Garrett Ganden, Chief Financial Officer; 828 - 46th Avenue S.E., Calgary, Alberta, T2G 2A6, Telephone: (403) 243-8500, Fax: (403) 531-3564
Copyright (C) 2008 CNW Group. All rights reserved.
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