Well, given that the market cap is almost 4000 million, I'm not sure it makes much of a difference in this case. Perhaps its the management telling us the stock is undervalued? But you are right in one way... it does them no good in Investors' eyes if they chop and change dividend policy.. sends a bad message out. State your policy up front, and stick to it, pl0nkers.
Artifically increasing the EPS by buying back your own shares is the usual underhand way that this scheme works ... depriving the shareholders of funds and virtually guaranteeing that the bonus is paid. But here I believe that the bonus scheme is based on 'Return on Capital Employed' ... by reducing the capital base of the company (by buying and cancelling shares) the same return looks better and there is an increased chance that the bonus will be paid -- same result as before but a slightly different mechanism.
And the bonus here is very, very significant ... I seem to recall the press saying that it was £280 million split between four executives?
As I say, with bonuses that large triggered on somthing that might be manipulated via a share buyback, the BoD may have their interests at heart rather than ours.
I'm also concerned at the size of the buyback that is in progress ... £2-3 million per day ...
Dividend vs. Share Buy back is an easy comparison .... it compares 100% certainty of payment of dividend against an almost 100% guarantee of executive bonus payment -- coupled with a hope of increased share price and a possibly increased (but probably decreased) dividend payment.
Overall I am against share buy backs ... they are generally a sign of an inward looking board that are more interested in protecting/promoting their own bonuses than transferring money to their share holders. In short they may have their interests at heart rather than ours.
curious regarding the dividend vs share buy back scheme.
Trying to work out if i want to invest in this one, but having been watching it for a while, i think i'll need to invest more than i usually do in a single share, to make it worth while, i am slightly kicking myself, because i know when it was in a slump, i didn't have the funds to invest, and now it's recovered to a point where i would have had a nice cushion, so now i'm back to the stage of trying to work out a good entry price, which given the current political climate...... a task which seems considerably harder !!
I am assuming that the latest RNS is detailing part of the company's share buy-back plans (25.5k shares @ average of £28.78).
If it is part of the plan to put a floor under the share price, are we happy that it seems to have kicked in at a reasonably high level and thus keeps the SP higher, or do we think that the Company has had better opportunities to buy more shares for the same amount of cash? I'm still learning a lot of the realities of direct investing, so I'd welcome hearing different views and thoughts on this.
Personally, I think that if I was spending my own cash, I'd have bought in lower, but it it puts a higher floor in place, then as a holder I'm very happy - I'm just trying to reconcile the 2 thoughts.
Well Dan, if you are right in what you say, 70% can't be sneezed at. Most will have done worse... fund managers who made 20 - 30% are splashed all over the financial pages for their performance... And no I didn't look at Sasol... don't remember seeing that tip from you.
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