Where Does The Next Dividend Come From?, page-27

My memory of the Melbourne presentation (which got a pretty hostile reception) was he said they have the reserves for the next dividend, but after that they had to earn profits from capital gains to pay dividends. They do not collect franked dividends from the longs they hold as they are passed back the owners of the shares they have borrowed to short if I understood his explanation correctly. He also said they had gone to a premium on the NAV previously which was unsustainable. My view is the risk is that shareholders with a book loss now sell in June to crystallise losses to offset capital gains, so we go to a discount to the NAV.