TLDR

  • Dividend Increase
  • Dividend Creation
  • Activist Investor
  • Alzheimer's Trials
  • Added to S&P Small Cap
  • Breakthrough Therapy
  • Billion Dollar Contracts
  • Bankruptcy
  • CEO Hired
  • Mass Layoffs


LevelFields identifies events that change a company's trajectory or mark a major catalyzing event in a company's lifecycle. All events can be traded short term, and many of them can be traded long-term as well. Below, we'll cover how to use these events for longer term hold times.


Dividend Increases


Companies that raise their dividends by a significant amount are signifying that they are in good financial health and the future looks like things will stay this way. Companies that raise their dividends by double digit amounts regularly outperform peers and the S&P 500. 


So what is a significant dividend increase? 

The answer really depends on how big the dividend is in the first place. If the dividend amount is 1 cent and the company raises it to 2 cents, that is a 100% increase but the total dividends allocated is still small so the increase is not going to get any investors excited about getting more cash. For this, it's best to look at the dividend yield - the dividend divided by the share price x 100.


To get going, start with companies that have a dividend yield of at least .5 percent. This will eliminate some of the noise in the data sets. 


A dividend increase of 10% is a lot for a company that has a dividend yield above 2% but not much for a company with a dividend yield of .5%. So the increase is relative to the starting point based on how much more money the company is giving out per share. 


A good rule is to not get excited unless the numbers are 10 on 1 - a 10% increase on a 1% yield. Above that is great and will often be a good long-term and short-term investment.


Dividend Creation

Companies that create a dividend are sending a strong message of "we're here to stay and are so confident in our cash position and revenue position we're giving away operating capital we don't need."  There are few statements more powerful than actions.


As a result, the creation of a new dividend is a bullish indicator for longer term success IF the company has revenue growth. However, if the company is high growth tech or healthcare company, the creation of a dividend program may be perceived as the company giving up on growth to become a slower growing company. In this case, there's often a selloff of shares as investors looking for high growth get discouraged by the transformation. 


It's important to note that the further away from an event in time, the more confounding variables can affect a share price. So while the creation of a dividend is a bullish event, typically, other factors such as earnings growth, revenue growth, competition, and macroeconomic conditions can affect the company's price performance over longer periods.


Activist Investor

Activists are wealthy investors that buy over 5% of a company's outstanding stock and attempt to take an active role in the company's management by influencing the Board or CEO to take actions that benefit shareholders. Famous activist investors include Bill Ackman, Carl Icahn, and Nelson Peltz. There are many activist investors out there.


After an activist takes a position, they seek to cut costs, grow revenues, increase profits, and reward shareholders with dividends or upward price action on the stock. There are a variety of ways activist investors can help the stock price, but it is not an overnight event. Often activists must convince other shareholders to vote a certain way to replace Board members or a CEO. Because of this, the Activist Investor scenario is a longer term scenario, as the activist needs 6-12 months to enact these changes to the point where the company begins to see an impact.


Salesforce is a great case study in activist investors. The company, known for its enterprise CRM software, was influenced heavily by two different activist investors. Over a 9-month period following the first activist investor coming in, Salesforce's stock price increased by 60%.




Disney engaged in a battle with activist investor Nelson Peltz, who was trying to make Disney more profitable and focused on profits. The activist investor came into the company in November 2023. Over the following 4-months, shares rose 26% on news the activist investor was pushing for changes at Disney, which investors and analysts liked.





Additionally, the following scenarios can be used for longer term investors.


  • Alzheimer's Trials --> identifies potential blockbuster drugs
  • Added to S&P Small Cap --> a significant moment for a growing company which makes the stock more widely bought and known
  • Breakthrough Therapy --> marks a drug or medical therapy that is superior to existing therapies. If the market size is large enough, sales can be in the billions per year.
  • Billion Dollar Contracts --> provide companies with large revenue and profit possibilities to expand growth
  • Bankruptcy --> companies that restructure their debt and emerge from bankruptcy can be long term winners (e.g. hertz, GM, Ford)
  • CEO Hired --> a new CEO can turn around an ailing company (e.g. Steve Jobs)
  • Mass Layoffs --> While this can be a bad sign for a struggling company, it's an essential part of a larger company's ability to scale profits successfully (e.g. META).


For more information on these scenarios, see the Trading Knowledge section.


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