GreenRoc Accelerates their World Class Project to Production as Early as 2028. Watch the full video 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.
Nuthin will make this go up agane sadley.
I is loosing all hop.
To the contrary Gutterclown.
For the buybacks to have maximum effect, we want the share price as low as possible.
We know the low SP is only artificial, but for what it is worth, if it could go lower for the buybacks would be ideal.
The CFO has spanked £1.7 M on VOD shares…he is either paid too much or believes in the share buyback story
Probably both. Besides, he certainly already owns or will receive at least as many Vodafone shares based on the incentive plan. To me that means that he really believes in the buyback story.
That argument was raging when it was 1.20 and the previous buyback in full swing. The evidence from that suggests a buyback has zero effect, possibly negative effect, if you are using assets to buyback the stock.
It only works if excess capital generated from earnings is being used.
Avoset 321, you is verey funy pre tending you doesn't wante the shar price to go up.
Hillarious ly you is also a gras, got me baned for a short tyme just for sayin negro witch ain't wasist in my booke...
Mole
''that suggests a buyback has zero effect, possibly negative effect, if you are using assets to buyback the stock.
It only works if ''
it appears that there are endless s amount of people who are clueless about buybacks for cancellation.
They work every time - to reduce share capital. The market values Vodafone on a daily basis. That worth is represented by the number of shares in issue, giving a price per share.
I would rather that money was invested on reducing the share count, and therefore in the future having monies allocated to dividends being available to fewer shares than stuck in an asset making no returns. The return/value to shareholders goes into the remaining shares.
Have they said when the buy back will start?
Longtimeinvestor, how much do you think these buybacks would increase the share price and how long would it take
'I would rather that money was invested on reducing the share count, and therefore in the future having monies allocated to dividends being available to fewer shares than stuck in an asset making no returns. '
Still, the div is reduced to 4.5c later this year regardless of how many shares. I am going to miss that income as an investor
On a positive, what is left in europe after getting rid of italy and spain , is growing at 3% pa.
Still have UK 3 to look forward to but that might be after the election.
Holding for now
Rob
''how much do you think these buybacks would increase the share price''
the sole purpose of a return to shareholders by way of buybacks for cancellation is to reduce share capital.
The value of each share will depend upon the value that the market places on the Vodafone business divided by the number of shares in issue. The market value fluctuates each day.
Long
''Still, the div is reduced to 4.5c later this year regardless of how many shares. I am going to miss that income as an investor''
The first reduction will be the February 2025 payment. The reduced forward dividend yield based on the current share price will still be above the ftse 100 average. Billions are planned to be returned to shareholders via buybacks, which makes a great deal of sense whilst the valuation is very low, and it also gives more flexibility.
''Still have UK 3 to look forward to but that might be after the election.''
News to move the process along is due on Friday. A UK merger with 'three' will be a of good benefit.
Longtimeinvestor
how much do you think these buybacks would increase the share price
I suppose it depends how long you intend being invested here, in the short term probably zero
So for anyone like myself who just wants to see this rise as quickly as possible i suspect it will be of no benefit whatsoever, I suppose it depends on how rewarding you think this investment will be in the coming years or not, each to his own i suppose
Rob
''i suspect it will be of no benefit whatsoever''
it is a 4 Billion euro benefit to shareholders.
This is good though right? Because the buybacks have more impact if the share price is at 40p than at 80p.
"Rob
''i suspect it will be of no benefit whatsoever''
it is a 4 Billion euro benefit to shareholders."
But Vodafone will have 4 billion less cash afterwards, so why should it translate to a price increase?
If I have a company worth £10 million and it has 10 millions shares at a £1 each, using £5 million of the companies cash to buy back 5 million shares means I'm left with a company worth £5million with 5 million shares worth £1 each.
KeRow,
The companies cash in the bank is only a very small factor in the calculation of the market capitalization, so your argument is flawed. You are confusing the companies cash position with market capitalization (worth).
Many companies are in net debt after assets and liabilities are factored in, and yet their market capitalization is positive, not negative, because revenues, profits and cash flow are bigger factors for the MC.
KevRow, I think there is a mistake.
You write:
If I have a company worth £10 million and it has 10 million shares at a £1 each, using £5 million of the company’s cash to buy back 5 million shares means I'm left with a company worth £5million with 5 million shares worth £1 each.
It should be:
If I have a company worth £10 million and it has 10 million shares at a £1 each, using £5 million of the company’s cash to buy back 5 million shares means I'm left with a company still worth £10million (in the balance sheet of the company cash is substituted by the 5 million shares). The residual outstanding 5 million shares are now worth £2 each.
Then there is a consequence for dividend payout. Assuming that the companies pays a dividend, every shareholder will continue to receive the same dividend, but the total dividend bill will be cut by half.
"KeRow,
The companies cash in the bank is only a very small factor in the calculation of the market capitalization, so your argument is flawed. You are confusing the companies cash position with market capitalization (worth).
Many companies are in net debt after assets and liabilities are factored in, and yet their market capitalization is positive, not negative, because revenues, profits and cash flow are bigger factors for the MC."
Thanks for the reply.
It is still selling off an asset and using the cash to buy back your own shares rather than, for example, using excess profits such as when an oil &gas company might buy back shares when the oil price has been higher than expected. So why would selling off an asset/using cash on your balance sheet boost the price rather than just cancel each other out?
It just seems like moving money around as the market cap will be less and the number of shares will be less. I'm oversimplifying but I'm not clear where the value that will translate into a share price increase will be unlocked. Is the belief that once the company is 4 billion lighter, it will be worth the same?
"If I have a company worth £10 million and it has 10 millions shares at a £1 each, using £5 million of the companies cash to buy back 5 million shares means I'm left with a company worth £5million with 5 million shares worth £1 each."
What about if I have a company with 60million assets and 50 million debt? I sell 5 million assets, use the cash to buy back shares. I now have company worth 55 milion with 50 million debt. Does that look better to potential investor?
Now the clever ones here will say "ahh but those assets were not paying their way". And this is where we disagree. Not everyone can run a Telco or Google or SpaceX. I can guarantee you in the right hands those "worthless" assets will pay their way. Zegona and Swisscom know how to make it successful, Vodafone doesn't. This is not my view, look at their share price in last 5 days and look at Vodafone. Don't be fooled by the "finance strategy", this remains a Telecom who doesn't know how to run a profitable business in Europe.
"If I have a company worth £10 million and it has 10 million shares at a £1 each, using £5 million of the company’s cash to buy back 5 million shares means I'm left with a company still worth £10million (in the balance sheet of the company cash is substituted by the 5 million shares). The residual outstanding 5 million shares are now worth £2 each. "
In the scenario above, it sounds like the shares haven't been cancelled. It should like there would still be 10 million shares but the company would just own half of them?
KenRow, my post was partly wrong, but the correct answer lies in between.
I’ll try to explain it later because I’m out for a walk.
KenRow - hopefully the below will prove helpful in understanding buybacks. You can never tell if buybacks will result in share price appreciation as these depends on a host of other factors besides the buyback.
https://hbr.org/2001/04/is-a-share-buyback-right-for-your-company
KenRow, I think Gohanito has already answered.
Anyhow, I had already prepared this example, therefore I post it.
Let’s assume that the market value of a company is £10 million.
There are 10 million shares; each share is worth £1.
Let’ assume that the net profit of the company is £1 million.
Therefore, P/E=10
Now let’s buy back shares worth £5 million. For simplicity, assume that the stock price doesn’t change during the buyback period. At the end of the buyback period, as you correctly says, the company has zero cash and has bought 5 million shares; let’s cancel those shares. Apparently, the result is a company worth £5 million (because cash is now zero), with 5 million shares, each worth £1.
However, the net profit of the company is still £1 million (there is no reason why that should change). That would imply P/E=5. For P/E to remain unchanged, the stock price should go up to £2,
However, it is reasonable to expect a stock price between £1 and £2, for two reasons: 1) the stock price will probably start to go up when the company starts the buyback, therefore fewer shares can be bought; 2) the company has less cash and therefore it is riskier.
Only improved earnings and BOD performance really improve the SP...along with sentiment etc
Buybacks merely improve the div per share allocation of the total div pool amount
...but the initial total amount still has to come from earnings..
The Investment bankers/Option traders/shorters etc dont care about MCAP ...they merely trade on the likely achievement or not of any BOD guidance and key targets using macro sentiment etc