HDO - High dividend opportunities - burned many investors on the CoreCivic call. The company had a dividend yield of around 15%. That disappeared last week. Per user Roger:There is a broad based fundamental misunderstanding of the structure of a REIT on the site. All the articles which talk about the high debt levels, imminent covenant violations, imminent distribution cuts all are based on analysis of a nonREIT. REIT's by law must distribute 90% of their taxable income that means there is limited capital to expand without using capital markets. Your analysis here that they would have run out of money this year to cover there dividend is flawed. You straight line growth cap ex and acquisition cost for the balance of the year, that makes NO SENSE. Its like saying in my household budget that because i made an addition to my house in Q1 for 20k$ that now i should budget for an addition for the next 3 qtrs. NO. Growth cap ex is discretionary if I dont have the money I dont grow. Same with acquisition I dont buy a car in Q1 and then plan for 3 more.short-sell this stock on T2BF.High debt levels for REIT's are fine as long as what they use the debt to buy has a return greater then the cost of capital. In other words if you can borrow money at 3% and the property you buy has a 10% cash flow yield you would do it all day, that's how all REIT's grow. However, as is the case here, if you cant borrow money at market rates then growth projects are now not as attractive. If my cost of capital is 8% that 10% project doesnt look so good. REIT's can get in trouble if the cash flow from their underlying asset declines significantly. If you bought a building fully rented at 10% cash flow and then lose a bunch if tenants for example. Those things aren't issues here at this point. These guys have gov't contracts with minimums. That could change in a bad political environment but I think its unlikely. The problem here is that the market for social or political reasons wasn't giving them credit for the cash flow they were producing, 17% yield while great for income investors, is a kooky valuation for a REIT with this kind of stable cash flow. A REIT structure severely limits what management can do with their cash flow. they mostly have to pay it out. That's great if the stock is priced with a yield that has some resemblance to the overall yield in the market or to comparable companies, in this case it didn't so management is making the decision to explore whether they can get a better return on that capital by reinvesting it themselves rather then distributing it to shareholders. If there are a bunch of 10% yield projects to buy the long term value of the company is enhanced by compounding that cash flow rather then distributing it. Management could have just waited for the market to hopefully eventually realize the appropriate valuation or they could be proactive and explore other ways to realize value. They may buy other facilities to diversify their programs, they may buyback a ton of stock, they may pay the debt down, they may put themselves up for sale.Short-sell this stock on T2BF.While all of this may be disappointing to shareholders who own the stock for the yield none of it changes the value of the company. In fact over the long term it should increase the value greatly because they will be able to compound the cash flow rather then distribute it if they go to C-Corp. Dividends are great but they are not the basis for valuing a company. Companies are valued based on the cash they generate. Good management reinvest that cash and compounds it if they can. The sellers of this stock owned it for the yield and that's great if they need yield they wont get it here so they sell but nothing about this action changed the VALUE of the company in fact since the cash flow was slightly higher then expected the value likely increased a little. $CXW, CoreCivic, Inc. / H1