What’s the next “IMF Super Dividend?”

Looking at Keith Fitz-Gerald's "Super Dividends" teaser for the Money Map Report

By Travis Johnson, Stock Gumshoe, June 20, 2013

Keith Fitz-Gerald and the folks at the Money Map Report are pitching something they call “Super Dividends” — payments that dwarf the typical dividend and that they say are even distinct from “special dividends.”

But not content to promise big returns ($16,559 as soon as June 28, they say), they also claim that they can predict these Super Dividends with a high degree of certainty. And, of course, they have to come up with a gimmick to get your attention and make you believe it’s all hush-hush and top-secret … so they use the IMF.

The International Monetary Fund? What do they have to do with dividends?

Well, almost nothing. But that doesn’t stop the teaser ad from building a near-conspiracy picture of the global financial elite conspiring to keep these “Super Dividends” secret.

This is one of those neverending “infommercial” ads, so I won’t quote it directly very much, but I’ll give you the gist.

Mike Ward and Keith Fitz-Gerald think that the variety of IMF Meetings and reports that mention “Super Dividends” prove that super dividends are real and unknown, and somehow connected to this large global institution … and in fact, that they’re a “priority issue” for the IMF and other powerful organizations.

And that IMF employees are reminded not to put these things on the books as dividends — implying, perhaps, that they’re being told to keep these “super dividends” secret and obscure.

They say that these IMF reports and minutes that they cite are not meant for the general public.

Which is true — but that’s not because “Super Dividends” are secrets that the IMF and the global elite are keeping to themselves … it’s because these are generally boring and technical reports from tax-related task forces. The report they quote from 2003 is from the minutes of the Steering Group Meeting of the International Task Force on Harmonization of Public Sector Accounting — you can see that here if you like. It’s in part (a very small part) about putting together a task force to deal with some questions raised by member countries about how to make accounting for “super dividends” more standardized across countries.

And the big “handbook” that they show briefly in the infommercial is the IMF Handbook on Security Statistics. Which also has nothing to do with keeping information secret, and everything to do with helping to standardize statistics that are kept and published and used by governments and economists about equity and debt securities. You can see it here if you want, or if you’d just like to see how the IMF statistics folks classify “Super Dividends” here’s that section:

Box 6.2 Super dividends

“Dividends do not include super dividends. Super dividends are dividends that are large relative to recent dividends and earnings. In order to assess whether dividends are large, the concept of distributable income is used. The distributable income of a corporation is equal to entrepreneurial income plus all current transfers receivable, minus all current transfers payable and minus the adjustment for the change in pension entitlements. The ratio of dividends to distributable income over the recent past is used to assess the plausibility of the current level of dividends. If the level of dividends declared is greatly in excess of that seen in the recent past, those dividends are treated as financial transactions and termed “super dividends”. These super dividends are treated as the withdrawal of owners’ equity. This applies to all corporations, whether incorporated or quasi-incorporated and whether under foreign or domestic private control.

In the case of public corporations, super dividends are large and irregular payments, or payments that exceed the entrepreneurial income for the relevant accounting period, which are funded using accumulated reserves or by means of the sale of assets. The super dividends of public corporations are to be recorded as the withdrawal of equity to the extent that they exceed entrepreneurial income for the relevant accounting period.”

That’s right — what this purported secret IMF stuff is about is really mostly just the standardization of reporting and accounting … helping countries to treat similar kinds of income in the same way regardless of the country, and helping to make sure that statistics that are kept are as accurate as possible.

The fact that the IMF might use a term like “Super Dividends” may not be well known, but that’s because the inner workings of any massive, data driven bureaucratic enterprise are rarely well known — because no one cares to know, and few need to know. The IMF is not keeping track of “Super Dividends” paid by particular companies or trying to share them with their top-secret friends in high places, it’s just that the global accounting and statistics technocrats need to know that they’re all defining the data and accounting for these dividends in the same way.

Keith Fitz-Gerald, in this “special report” from Money Map, describes “Super Dividends” as a phenomenon like rogue waves … so of course, he uses the term “Rogue Income Waves”.

He says they’re not the same as “special dividends” — which are not that uncommon. “Super dividends” are “larger and more rare”, and until recently no one even knew they were happening.

Which isn’t really true, of course — these are generally significant corporate events, and they get covered in the financial news media — but they also are not particularly magical, and they’re not, unless you believe Keith Fitz-Gerald, particularly easy to predict or value.

He gives a couple examples of “Super Dividends” — one of them is Loral Space (LORL), a defense contractor, which he said paid out a massive “Super Dividend” that would equal a 68% yield at today’s price. Which sounds obviously enticing — but, of course, these are (as that IMF note indicates) special dispersals of equity in the company, not payments from ongoing corporate income. They’re not recurring, so get that 68% yield out of your head.

In Loral’s case, the company actually paid out two massive dividends last year — one that came because their Telesat division was recapitalized and pushed cash up to the parent, and the other that came after they sold their other significant division for cash and dividended out the majority of that cash. So investors who owned LORL back in the Spring of 2012 ended up with $42 of special dividend cash (I don’t know how that dividend was treated for tax purposes), and the stock was moving up through the $70s before those dividen