Hi Lenny, Yes I forgot about the share buy/back option. I am not sure how it runs on the visible P&L but agree with you balance sheet wise where the effect depends on where they go. Less indebtedness is good and should cause a rise in share value, however in the this case its a bit like inverse quantitative easing it does not seem to work well and can become addictive and destructive! LOL It could eventually lead to rights issues to reestablish the balance. Just as QE might lead to all sorts of fixes we don't want to see!
a month ago on 6th november, i targeted 330p as an entry point. today, we are here...CNA closed 329.4p but i am still not convinced this trend is reversing. i reckon CNA will hit 300p then bounce. could be wrong obviously but anyway, continuing to wish investors here all the best.
MJ, I think you are right about the impact of government actions on the sp. However, I am not so sure about your point on infrastructure investment. If the issue were simply that profits were being limited by govt. (or opposition) comment, then we could expect a reduction in the companies capacity (and will) to undertake such investment. However, the ongoing share- buyback indicates that in fact, there is lots of moneyy out there, and that profits are actually healthy. A company can disburse profits in a number of ways- it could pay its people more, it could undertake investment or it can buy its own shares back. The fact that it is buying back shares says more about the board's attitude to disbusing profit than about any possible need for borrowing more. For example, if the members of a board have as part of their terms and conditions a target of raising the share price, then it would seem a simpler thing to start reducing the supply of shares in order to drive up price than to engage in investment to try to do the same thing.
Hi guys, Another penny's worth, most smaller investors are in these shares for dividend and don't really care much about SP. (It goes up and down but the company remains stable and dividend is hopefully inflation proof, the basic reason for being in a particular company.) I feel that this style of investing (and generally in the case of utilities) is being destroyed by both government and opposition attempting to cap profit. Useful infrastructure investment comes out of a mix of profits and share holders pockets. When there is less profit who/what will suffer first? (I guess, If utilities are forced to borrow more as an alternative to profit all the normal investors will flee!!)
The reason for the decline is the current state of uncertainty around how the government will accomodate a couple of ongoing energy market problems. The first is the idea that despite a decade or so of deregulation, the UK has replaced a monompoly provider with an oligopoly that acts like a monopoly provider. As such, the market doesn't operate in a way that allows for the expansion of competition or that provides cost- effective energy as was originally envisaged. I think that the government would prefer to leave things as they are but publicv opinion and media sentiment are forcing its hand. Unfortunately, the governmnet does not have a real plan and so we have a state of flux. The second issue is the possibilty of government action to reduce bills by cutting the green levies. This is politically difficult given Cameron's emphasis on the new green credentials of the Conservative Party. He is going to look like a cynic and a scheister if the only way he can reduce nominal energy bills is to ditch green policies at the first sign of trouble. And so we have a state of flux. On top of all this, the profit warning was never going to have helped things with so long until the next div.
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