Risk/Reward No. 12 Sent: Thursday, August 05, 2010 4:59 PM

THIS IS NOT INVESTMENT ADVICE.  IT IS A PERSONAL REFLECTION ON INVESTING.   I AM AN AMATEUR.  RELY ON NOTHING STATED HEREIN. I made a purchase today that fits my "income" strategy, but in an unconventional way.  I bought Warner Chilcott (WCRX). On July 30, 2010, WCRX was trading at 24.50 just before it announced a special $8.50 (35%!) dividend subject to financing contingencies.  In response to the cheap cost of debt (even at its B rating) and the real possibility that dividend tax rates will go from 15% to 39.6% if no action is taken by Congress before year end, WCRX decided to reward its shareholders (some of whom hold large positions) by refinancing (read, releveraging) the company.  No ex-dividend date was announced, but the intention is to pay the dividend in the third quarter.  I assumed they have financing arranged based upon some articles I read and the fact that the announcement would not be made if it were not already lined up.  So, I took the leap at $25.61 which is a $1.10 premium above the preannouncement price.  I did so without nailing down whether WCRX can retroactively set the ex-dividend rate---something I have not seen before.  If I am right, I just paid $1.10 today for $8.50 within 60 days.   Someone out there tell  me that I am crazy.    This is literally too good to be true.   Warning:  a trade is settled in three days time while the ex-dividend date is only 2 days in advance of the record date--and the record date is the one that determines who gets the dividend.  Always something to consider in a play like this, and the reason I took the leap without full investigation of the retroactive question. As the year winds to an end, I suspect other companies that care about their shareholders will also leverage special dividends using inexpensive de