“The special dividend variable is quickly turning into a significant Wall Street anomaly that will have unintended consequences,” Jason Schwarz writes for Seeking Alpha. “Without a precedent it’s difficult to forecast exactly what will happen, but we’ve come up with three likely consequences.”

Consequence #1: Those companies who prepay 2013 dividends and beyond will become less attractive to income funds over the next year
Consequence #2: Any company that chooses not to participate in the special dividend will become more attractive to income funds in 2013
Consequence #3: In the short run, non special dividend participants will face selling pressure as institutional money managers re-allocate to maximize exposure to the anomaly

“Apple’s refusal to issue a special dividend is causing a third wave of its sell-off that began on September 21st,” Schwarz writes. The first wave was caused by institutional re-balancing due to Apple’s 74.9% YTD returns, the second wave was caused by the hangover effect of President Obama’s re-election and the third wave is being caused by special dividend posturing as funds sell Apple in order to gain exposure to the dividend bubble.”

Schwarz writes, “Apple’s rally window is coming, this dividend bubble will likely enhance Apple’s next rally, but we’ll need to endure another dip before it takes off.”

Read more in the full article here.

See also: Apple’s stock swoon blamed on increasing Apple’s margin requirements – December 5, 2012

Related articles:
Will Apple be next up to pay a special dividend ahead of expected U.S. tax hikes? – December 4, 2012
Analyst: Don’t expect special dividend from Apple Inc. ahead of Obama tax hikes – December 3, 2012
Apple special dividend: Why AAPL shareholders are owed $30 per share by Christmas – November 29, 2012
Apple to distribute special dividend ahead of fiscal cliff? – November 28, 2012