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looks like BP ADR and Brent is making a break for it. Brent looks as though its headed back to $70...
Looking at the average price, over the past 2 quarters, I think Q2 may be a great one for BP. We may well get a decent trading updates not long after buyback is complete....
'going green has lost confidence'
In the 1990's Baron Browne took credit 'for transforming the oil and gas industry's approach to climate change, and for creating a renewable and alternative energy business within BP' so the strategy and the problem is not new.
Political interests in global oil vs current interests finding new places to stuff printed (QE) money as fast as possible is the issue imo.
For example, its in the interests of the EU to force faster transition and to fund renewables with printed money through the ecb 'asset purchase programme'. But i'd bet those with interests, for example, in the thousands of miles of pipeline spread across Europe from the Netherlands/Rotterdam entreport wont be quick to give up gas quickly.
I think BP is doing the right thing sticking to what it can negotiate around its own portfolio. It is not capable of solving climate change by itself. That has to be done by all industry and driven by demand. No point building something if there is no demand. If the argument is build it and the demand will come, then the demand plan needs to be agreed across all interest groups/ industries, not chucked solely at BP. In the meantime, shareholders get SP (buyback) support, a 'sustainable' dividend promise and the moral high ground pursuing an accelerated green strategy pending all interest groups stepping up to the table and agreeing what demand looks like.
@smithy I was speaking purely from a revenue / profit growth perspective. Stagnate is generous looking back from now to 2012. Not to say their fortunes cannot change...
I wouldnt describe IBM as stagnating. You want to see what they are doing in the 2 nanometre IC technology space. Not due out on the street in production until 2024/5.
@MarkGo
I disagree with the summary provided, in reality the share price would now be 50% less if there was twice as many shares and considering your request that the buyback money was historically spent on additional dividends. I.e. 64.5b worth of value based on share price.
Now more importantly if you were paying the same dividend today per share without buy backs that would be an additional cost of 5.8b per year going forward. This in theory is only compounding if the dividend continues to increase.
In reality I don't believe the dividend would be at current levels without buybacks due to the increased cost per annum.
Buybacks and dividend mix is my preference as a LTH. It provides upward pressure in terms of stock price relative to EPS and allows the company to increase dividends whilst offsetting the overall cost of dividends.
If a company stagnates such as IBM is currently doing, it's difficult to increase the divided.
Historically my biggest annoyance with Buybacks is timing...BP in this case are doing it at a time when the SP is undervalued IMO. Cannot say the same for IBM as I've not looked at the details.
To reiterate I'm talking holders for 10years + receive the best benefit to buybacks, so can understand frustrations of those holding for 2/3 years
Bp is doing a long term view to sp and company, they cut debt in first quarter to 33.3b , reducing workforce by 15% , going green has lost confidence so is buyback its company while its valuation is low. Americans cut capex spending and giving as dividend its not a great long term strategy
Buybacks longer term should squeeze the price up, not sure but maybe having the debt on the books is better in regards to tax implications.
MarkGo. The IBM example is startling and it does illustrate that BP through buybacks are simply flushing money down the toilet that could be used to pay down debt or increase dividend. Complete waste of money.
About 5 days average trade value left than.
Cong go to BP website states $500 m for Q2
A little over £130 million for buybacks left
Now I just read an article that states 500 mil $.... Just ignore me
That's cool, I just had another look and the stated buybacks is 500 £, not dollar. So on rough look they are about half way through with 240mil to go
the buy backs are in dollars. Each RNS states the average buy back price but I just used an approximate value. If someone has the time on their habds they can look on te board and do the sums. I was quoting an approx. value so if someone wants to do the sums. From a very approximate look - it is approximately between 100 - 150 million dollars to buy back. Apologies if am away off but I am being approximate here.
Looking at the company information there are 20.33 billion shares in issue as of today so the amount of shares bought back represents under 0.5 per cent of the total amount of shares in issue.
It was $500 mil not £500 mil for buybacks?
I had a look at the RNS information on Saturday morning. From adding up the number of shares on the RNS reports, BP have bought 84,397,120 shares back. For argument sake, say the average buy back price was 310, the company have purchased approximately £260 million worth of shares. This equates to approx. $370 million. So for arguments sake, from a dividend point of view, BP will not be paying out £12.6 million in dividends against those shares. About another $130 million to purchase back this quarter.
Buybacks are of little to no benefit to the SP or private investor's. ' Returning cash to shareholders ' via buybacks is smoke and mirrors bu***hit. The only real beneficiaries are BP executives bonuses and renumeration targets as buybacks are used to manipulate earnings per share.
By way of example.
From 1995 to 2018, IBM, the supercomputer group, has spent $162bn to repurchase more than half of its outstanding shares. What is left, for those who did not sell, is a company now valued at $154bn in 2018 and $129bn today.
$162bn spent on buybacks for a company now valued at $129bn
$162 billion returned to shareholder via dividends would be true, honest return of cash to shareholders.
When I decide to sell my BP holding I won't be buying another oil stock!
If you arent happy with the strategy, sell and buy another oil major
I'm not convinced with share buybacks. They'll increase earnings per share for, probably, the benefit of directors. If BP have spare cash why don't they put it to good use within the business to compound return on capital. Or haven't they any good projects / ideas / acquisitions in which to invest?
Ag
'' ‘Returning value to shareholders’. Apart from saving BP having to pay dividend on the buyback shares it seems like a total waste of money and won’t benefit the SP one bit.''
''Can anyone enlighten me here?''
A buyback is a completely different issue to the share price.
The market determines the value put on BP at any given time.
A buyback for cancellation increases the percentage of BP that shareholders retaining shares
will have. Any amount available for dividend distribution will be split by fewer shares.
If you don’t like the strategy, sell and buy Exxon and Shell. No one is forcing you to hold.
Thanks Spights for link.
£10 million share buy backs today with a total of $500 million buyback planned across three months in Q2. This tiny amount across this period of time won’t benefit the SP at all.
I understand it reduces the number of shares on the market but it seems a poor way of so called ‘Returning value to shareholders’. Apart from saving BP having to pay dividend on the buyback shares it seems like a total waste of money and won’t benefit the SP one bit.
Putting the money in more profit making CAPEX, even reducing debt by half billion dollars or increasing dividend by 10% all seem to make better sense to me, particularly the latter!
Can anyone enlighten me here?