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" and the reduction of this large discount to the assets value "
If you looked at the huge book value forthe German assets and compared it to the recent German performance, you would think the assets were over valued
Have to hope they dont have to do any write downs on book values within the forthcoming end of year results
Have to see what they do with the book asset value for Spain too, and later Italy
"The market determines the value of Vodafone on a daily basis.
There is no direct connection between the assets that Vodafone have and the market cap. "
Yes there is. The value and performance of those assets largely determine the share price, as well as other factors beyond the companies control. This "large discount" is reflected in the current share price and the reduction of this large discount to the assets value is what you are stating is what makes the buyback excellent value.
Fingers crossed it start to close rather than continuing to widen!
The market determines the value of Vodafone on a daily basis.
There is no direct connection between the assets that Vodafone have and the market cap.
Vodafone net assets at about 63 Billion Euro
Current market cap is less then 22 Billion Euro
this makes buybacks excellent value, making investments purchasing at a large discount the assets that generate the Vodafone profits that are the main driver of market valuations.
Vodafone make excellent returns on these assets making the investment of 4 Billion very hard to beat
Vodafone net assets at about 63 Billion Euro
Current market cap is less then 22 Billion Euro
this makes buybacks excellent value, making investments purchasing at a large discount the assets that generate the Vodafone profits that are the main driver of market valuations.
Vodafone make excellent returns on these assets making the investment of 4 Billion very hard to beat
"Vodafone net assets at about 63 Billion Euro
Current market cap is less then 22 Billion Euro
this makes buybacks excellent value, making investments purchasing at a large discount the assets that generate the Vodafone profits that are the main driver of market valuations."
Only if they can close that value gap but I'm glad that you now acknowledge the value of a businesses assets will have an impact on it's share price. Sadly, it seems to have been moving steadily in the opposite direction, so either the market is wrong, they aren't worth that in the first place/are depreciating in value, or the market believes that this management team can't realise their full potential. Hopefully, the picture will be clearer in May.
"Returns allocated to shareholders from profitability of the business will in the near future be distributed to Billions fewer shares."
This is true. The buybacks won't drive any increase in profitability but will mean that what profitability there is will be divided between less shares. I suppose the flip side would be that the 4 billion could be invested in a profit making venture, so you'd have an increased level of profit shared between the existing number of shares.
Returns allocated to shareholders from profitability of the business will in the near future be distributed to Billions fewer shares.
Vodafone net assets at about 63 Billion Euro
Current market cap is less then 22 Billion Euro
this makes buybacks excellent value, making investments purchasing at a large discount the assets that generate the Vodafone profits that are the main driver of market valuations.
Just to add. In this regard, I don't disagree. If the buybacks are completed and the valuation gap between net assets at about 63 Billion Euro and current market cap at less then 22 Billion Euro closes, clearly they will have played a blinder. The elephant in the room is, will that happen!
"Vodafone net assets at about 63 Billion Euro
Current market cap is less then 22 Billion Euro""
So the market is valuing them at a significant discount. Why do you believe they are wrong?
It doesn't seem so long ago that you were arguing that asset values have nothing to do with the share price/market cap, now you seem to be suggesting that the buybacks are a good idea precisely because of the believed underlying value of the assets and that the current share price is trading at a significant discount.
Dan is expecting the market cap to fall by 4 Billion
Vodafone net assets at about 63 Billion Euro
Current market cap is less then 22 Billion Euro"
"The buyback will be investing 4 Billion purchasing assets at way below the actual net asset value.
The value of the investment gets transferred to the remaining shares"
Minus the cost of the assets (4 billion) that were used to fund the purchase of the shares.
Time will tell if the remaining assets are being purchased at a significant discount or not but the hope will be that they are.
It was aimed at KevRow
Avocet. Hi, I wondered who your post at 14.49 was aimed at? I am finding some of the posts flying backwards & forwards lately a bit confusing. Cheers mate.
It uses its own cash, so you have a bigger slice of a smaller pie?
At the end, less cash and less shares. You seem to be focussing on the less shares as if it’s doesn’t come with a price attached.
But the SP doesn't factor in the NAV you said? Which way is it.
The buyback will be investing 4 Billion purchasing assets at way below the actual net asset value.
The value of the investment gets transferred to the remaining shares
Yes it uses its own cash. Who else's cash should it use? lol
Where the cash has come from is completely irrelevant, but since you ask, I think its better it comes from the sale of loss leading businesses rather than anywhere else.
What would you do? Sell profit generating businesses and keep those that post losses?
I dont think it makes sense trying to explain this to you any longer. Many have tried, all day, but any its going against a brickwall.
Kr
''What do you think a cancelled share is?''
''it has created no value at the point of cancellation.''
''The 4 billion is essentially leaving the business ''
Stop the nonsense once and for all - 4 Billion is being INVESTED on behalf of shareholders, the result of which is shareholders will own a greater percentage of the business with the cancelled shares no longer having a right to assets and profits.
no more from me to you on the subject.
To keep it simple. 4 billion Euros will be spent on 4 billion Euros worth of shares (and then cancelled). If you are minded to think that this will add value in some way, then that's great. Maybe they should use the full 12 billion Euros on this one way bet and really make the most of it! Clearly, they are missing a trick!
To use your favourite phrase, they obviously have a lot of learn.
Kr
''What do you think a cancelled share is?''
''it has created no value at the point of cancellation.''
''The 4 billion is essentially leaving the business ''
Stop the nonsense once and for all - 4 Billion is being INVESTED on behalf of shareholders, the result of which is shareholders will own a greater percentage of the business with the cancelled shares no longer having a right to assets and profits.
no more from me to you on the subject.
"Do you not get that as the shareholder you own a bigger part of the company for every cancelled share?"
A company that has used it's own cash, from a one off sale, to acquire these shares and so ends up poorer at the end of it? A bigger slice of a smaller pie.
Do you not get that as the shareholder you own a bigger part of the company for every cancelled share?
""ffs does it really need spelling out? dividends are monies leaving the business"
What do you think a cancelled share is? Over time, this may prove to be beneficial, or it might not but it has created no value at the point of cancellation.
At the point of cancellation, you are just converting cash into a share to be cancelled. The 4 billion is essentially leaving the business in the form of these cancelled shares.
KR
''A more fitting example is the last few Vodafone ex-divi days as you are dealing with cash which is the asset we are talking about. If the cash has no impact on the market cap, why does the share price open the next day at exactly less than what is being paid out?''
ffs does it really need spelling out? dividends are monies leaving the business, where shareholders pre xd are entitled to.
Spanish and Italian proceeds will be invested - there is no 'special' dividend
KR added with BE to the waffle list