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Usd10 dividend by market cap ~650 = less than 2 percent. So if they spent all of it, all else equal, that’s the best improvement you’d get.
But as I understand it their preferred return of capital to shareholders is through the 7 percent dividend. They launched the buyback when underperforming.
In the extreme case say Brent was plummeting to sun 50 I wouldn’t expect them to keep buying as they might end up with a share price well below the buyback price.
'What I didn’t understand is the comments of ‘missed opportunity’ when buying back at 182 vs 172, where the price had been previously. It really makes no difference.'.....
It was really an observation about the process Elcapitan - from a value acretive perspective G should be buying at the best possible prices. 10p may not be huge bucks in the grand scheme but it does imply that no one was actually performing any price monitoring on the days in question - which was really the point. Mind you, 6% would be significant to me if I was spending £250k, it's more than a lot of dividends.
Thanks for taking the time to reply.
And apologies, totally get that if you are trading in and out of the share then the day yo day volatility is of course very interesting.
What I didn’t understand is the comments of ‘missed opportunity’ when buying back at 182 vs 172, where the price had been previously. It really makes no difference.
What I think is also interesting is when this share manages to get momentum. It’s hard to think what will do it other than continued to bang out the cash and build the story until it becomes impossible to ignore.
What I think makes it hard is the relative performance of gkp. Who’s story is I think harder to understand.
Hi Elcapitan,
It's not irrelevant to me personally because buybacks, however they are implemented, can influence the short and medium term share price.
Phase one of G's buybacks netted me a cash trading profit (a short term target) and also restored the longer term ratio of G's sp to OP, which had dropped markedly from the end of April - thus benefiting my longer term holding. I re-acquired the shares when the price dropped back as OP fell and in anticipation of further buybacks. They consequently affect a) the net cost of my holding (I deduct any profits from the cost of my holding) and b) increase the market value of each remaining share - the non-traded core of my G investment.
What sp do you think G would be enjoying today if they had not embarked on the buyback programme? The kindest estimate, based on G tracking Brent 1:1 from 24th June, would be 165p (DNO has lost a good deal more). That's potentially a lot of money as far as I'm concerned. So, yes, I'm interested - not necessarily obsessed.
For those who choose to invest in G and not manage their investment then I guess buybacks may be of less interest - although I can't conceive of a situation where I would not be interested in how G's sp was moving in relation to OP and the wider market.
I don’t understand the obsession with buyback
Is Genel buying back 10m dollars of shares important in your investment appraisal? Isn’t it irrelevant
GkP down more
So presumably all those who want aggressive buy back would want a very temporary spike and then a fall back?
With BB activity resuming over the last couple of days, just 16 trading days left to run and, possibly, around £4m left to spend - still about half of the budget - it seems worth reviewing my bb expectations. The spend could break down to about 250k per day - not dissimilar to today’s outlay. Given the effect of this week’s quite mild effort, which pushed the G:OP ratio up to 3.14x without much difficulty or expenditure at one point, I’d certainly expect 3.2x to be attained as a minimum. My original suggestion that 3.4x was achievable still stands based on the quantity of cash remaining, although I recognise it looks increasingly optimistic and, consequently, my more conservative working target remains 3.3x in the absence of any other stimulus. That would put G just under 200p at $60 Brent. Of course, there are no guarantees regarding Brent!
Bought back
138,507 shares bought and we finished down WTF
Nah
Vol. Sold 295,348
Sold Value £522.77k
Vol. Bought 408,153
Bought Value £722.43k
We have a seller out weighing the buy backs.
I don't disagree Hydrogen, news that signals a tangible increase in revenue should motivate the market - that's where G came unstuck a year ago at 290p + , having implied imminent great things then rolling back.
Buybacks, on the other hand, tend to have technical effect. The last lot moved the value up v OP, by mopping up sellers at a certain level, and so will these. The question is 'by how much?' Bunks commented last week that we shouldn't expect fireworks but I think we should expect a measurable improvement. It will be interesting to see what quantity, if any, they bought back today as the price has actually reversed relative to Brent since Friday (at the time of writing- 4.15pm).
Gkp still flying, same region, same oil, same buybacks, any reason?
Now we are into 'phase two' of the Buybacks - BB.02 - and have more of a feel for how these are implemented and influence the sp, I’m idly contemplating what effect they may ultimately have. Bearing in mind that the average underlying sp is primarily influenced by OP rather than buybacks, it’s their potential effect on the ratio of sp to OP that’s of interest to me.
We know that BB.01 boosted the ratio from 2.7 to 3.0, so it’s reasonable to think that the second phase, with twice as much cash behind it, should achieve at least the same improvement, putting the ratio at 3.3. Although the extra cash implies that the second phase might theoretically double the improvement - to 3.6x - I’m pretty sure there’s a law of diminishing returns that will progressively reduce their effectiveness as the sp rises. In any case, 3.6x would exceed anything G has achieved this year and does look extremely optimistic. But somewhere between the two could be feasible. Entirely subjective, of course, but I’m inclined to think that 3.4 could be achievable with anything higher a bonus.
At $60 Brent, that multiple would put G at 204 and, at $65 Brent, G might then reach 221p which, as Hawkey might say, is not too shabby. Of course, if OP continues to languish around $58 then 197p might be the best I can hope for.