We would love to hear your thoughts about our site and services, please take our survey here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
@testpack
Assume the current dividend currently costs the company £100m a year. If they reduce the share count by 20% then they only need to pay £80m to maintain the same payout per share. It basically frees them up to increase the dividend in future at no additional cost.
RNS this am announcing that the above increased their holding from 2.5% to 3.03%.
A pretty large holding for what looks like a fairly small hedge fund manager -Odey reincarnate?
I don't agree with the concerns that treasury shares will be somehow and illegally gifted to management or even its own board. This is just a ridiculous suggestion. It's not a Russian or a Chinese company incorporated in Cyprus or Turks and Caicos (!). I believe they are not cancelling the treasury shares in the event they find a value enhancing acquisition, that's my assumption. Ultimately the treasury shares will be cancelled if they don't find a good use for them. The business is diversified now, globally, with UK driving perhaps a third of revenues. It's increasingly a global business, so the stability and longevity of its cash flows is only improving as the quarters pass. I'd be fine with more in dividends, but buybacks make the most sense in terms of returning cash to shareholders from a tax perspective.
Straightaim.
'The other advantage of buybacks is that they reduce the burden of future dividend payments, as there are less shares outstanding that are due the dividend.'
I don't see the logic in this comment. Let us assume that co profitability remains. sbb's reduce the amount of shares in issue to 1 million. The cos metrics remain similar, and hence MC remains similar, at about £1B, The sp would be a £1000 per share. . Investors paying that kind of money would defo be seeking divis. It's an extreme example, but that is the logical conclusion.
And yr comment t'other day, saying if SBB scrapped, increased divis, you would just buy more shares. Excellent. Investors buying in the open market, creates demand, creates higher SP. That is what we want. QED.
There is no optimum number of shares. They'll keep buying them back until there's only yours and mine left!
That's the whole point, eventually the share price has to adjust upwards to reflect the stable / growing earnings against decreasing share count.
The other advantage of buybacks is that they reduce the burden of future dividend payments, as there are less shares outstanding that are due the dividend.
Exactly Savaloy. Pay proper divis. It is in the back of my mind that BOD might 'treat' themselves to treasury shares as a bonus. If investors take shares in lieu of cash, then only buy back that amount. The BOD has never said what is an appropriate amount of shares to buy back. What is the 'objective' number of shares.?
Apendragon. Following on from your comment that the sp might fall below £10, the best policy would be to sell your holding, at least 50%, wait 'till its sub tenner, and buy then. Makes sense of your convictions.
Share buybacks at the current price are a great use of capital, and if they paid a larger dividend I would just be reinvesting it in more shares anyway.
I can appreciate that dividends allow shareholders to decide whether to de-risk their investment or increase their relative shareholding though. Maybe it appeals to a broader base of shareholders, people that rely on dividend income etc.
So............is this the point at which they bring the existing share buyback programme to a close and re-invigorate the share price performance by announcing they're reverting back to paying proper dividends. share buybacks are all well and good but time for a change - they've spent over £200mill on buybacks.........(possibly alot more I've lost count).
They're probably earning in excess of £50mill in interest on the cashbalance - there's enough there to pay a dividend in and of itself. Thoughts?
Ofcourse not, I am adding on the way down
Apendragon. So, you have sold all your holding then?
Looks like investors are anticipating carnage when they release their TU next week.
Looks like we cld see sub 10GBP imo
FOR THE AVOIDANCE OF DOUBT, NOT ADVICE
@Tom78 - Share buybacks are not price neutral if the company is undervalued. Share price should increase over time if buying back below intrinsic value.
Lots of companies hold repurchased shares in treasury, I'm not sure why there is so much fear that management are going to steal them.
The shares aren't being cancelled.......which is a pity. I think there's a worry that loads of those bought-back shares will be distributed to the directors in a bonus structure........that's why the inflection point never seems to actually arrive.
There's a persistent seller in the mkt too - doesn't matter how many Plus buy a day.............down she goes..........if there's anything but a 'business as usual, we confirm the guidance previously given as to performance' on 24th it'll be mayhem/carnage here. The shares seem to be hit hardest and recover slowest if there's a nasty surprise............they've got previous for it in years gone by..........holding my breath tbh.
On the website Q3 2023 Trading Update 24 Oct 2023
Share buybacks are price neutral anyway as cash comes off the balance sheet and is turned into treasury shares, reducing the shares in issue. Long term it reduces shares in issue so future dividends are divided by a smaller amount of shares so in theory increasing the pay out per share.
Also directors like them as it raises the EPS for the same reason making the company look more profitable even if the earnings stagnate.
Might stop at 800p
Not even the 30000 shares a day buy back is helping this value destruction. Net Cash of 800m and it still drops…drip, drip, drip
Not a clue. Only suggestion is a 'glitch'.
Can someone enlighten me? What are these trades?
Yes, exactly what I was thinking!
Zzzzz
You only confirm your ignorance, fool
Intent to manipulate is breaking the law. You display intent. Imbecile.
LOL cldnt make it up! first you say this is not a penny stock and so cant be manipulated; now you say I am manipulating the stock - which is it pray?
Oh dear thick as mince I fear