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Think I'll get a takeaway tonight, it being Friday and celebrate not being tempted by Vodafones 'bargain' price shares.
Normally i do take reckless gambles but not this time.
Just went 83.99 for a few seconds
wonder how low sp would be without the buyback
"wonder how low sp would be without the buyback"
The share buybacks make no difference, in my opinion, since the buybacks are around 6 million per day with the average traded shares being 111,693,356, over the last 49 days, so around 5.4% of the last 49 day average. The purchases may also be off book and if that's the case they wouldn't affect the on exchange price anyway.
In this environment the buybacks may have a negative effect on the SP. Spending billions to buy stock when you could be paying off debt is clearly not impressing the big money.
"In this environment the buybacks may have a negative effect on the SP. Spending billions to buy stock when you could be paying off debt is clearly not impressing the big money."
The buybacks are to prevent dilution due to maturity of MCB's, the buybacks make perfect sense. The more shares in issue, the more cash required to cover the dividends.
Doesn't make sense. They need to suspend dividend anyway. The buyback could be used to pay down debt.
"Doesn't make sense. They need to suspend dividend anyway. The buyback could be used to pay down debt."
But the buyback are paying down debt in a way and preventing dilution.
Companies in trouble with too much debt often do a rights issue to get some money in.
Vodafones buying of shares each day seems a bit stupid in my opinion, they might need that money very soon.
"Companies in trouble with too much debt often do a rights issue to get some money in.
Vodafones buying of shares each day seems a bit stupid in my opinion, they might need that money very soon."
Are you saying Vodafone's in trouble? Just because Read's gone doesn't mean they're in trouble financially, the most likely reason is disagreements on strategy going forward. All any of us can do is guess how things will unfold when a new CEO is appointed and communicates a strategy. No doubt e& will have a view on Vodafone maintaining the dividend, all any of us can do, currently, is speculate.
Well 2007 - 2009 all the housebuilders had to do rights issues for example.
Anyone not able or willing to take up the cheap shares got heavily diluted.
Just giving housebuilders as an example, obviously Vodafone is much bigger.
"Anyone not able or willing to take up the cheap shares got heavily diluted."
There's no indication Vodafone will have a rights issue. One reason I can't see a rights issue is that they've been buying back stock to prevent dilution and another reason is that it'd be madness to have a rights issue with the share price at rock bottom.
Rock bottom is almost always when companies have rights issues. It's because they are desperate to get money to keep the banks happy.
how much value has been lost under nick read? 25B
'doubt e& will have a view on Vodafone maintaining the dividend, all any of us can do, currently, is speculate.'
Given we were told the sequence of meetings leading to Nick leaving, the BoD then reported they intend to pay the Feb and June dividend...'Committed to min. 9c. dividend p.a.' is what they actually reported at H1.
BoD could change its mind for the June div, but as it stands, they put MDV on the hook for the €1Bn cost savings and look like they intend to pay the June one. A new ceo might recommend they dont because he or she has a better use for the cash, but right now, debt maturity is 11 years + so unless they continue to tender to repay debt early (at a discount), freecashflow doesnt seem to be the issue and paying the june div seems to be current course and speed.
No way VOD are doing a rights issue. Only companies with serious cashflow issues do that like housebuilders/miners in 2008/9 and more recently Credit Suisse. VOD are nowhere near that. If you look at the balance sheet they have ample liquidity at the moment.
As for the buy backs, they are buying shares to repay the MCBs. They effectively borrowed money at around 110p and they will pay it back by buying shares at 85p. Sounds pretty smart to me.
"They effectively borrowed money at around 110p"
To be more accurate:
The MCB was worth £1.72 B and was converted to 1,518,629,693 VOD shares (including 1.5% interest!). So, for each share VOD got (1.72/1.518629693 =) £1.1326. And today they bought 6,074,521 at £0.8436 making 28.9 p PROFIT on each share!
So, just today's profit = £1,755,536.60 ! If one could calculate the profit (or loss) made with each buyback transaction since 17th of March 2022 and add them all up would come with hefty sum.
What was regarded as debt has turned out to be a profit making investment! MCB holders lose, VOD win!
Back in the old days (pre 2008 credit crunch) Mr market used to love companies with leverage if the return on leverage employed is larger then the interest paid. The larger the leverage the better! VOD debt = E45.5 B with an average interest of just 2.5% and 11 years maturity while post-tax ROCE = 5.1% and now (in the post 2008) VOD is being punished for that!
NNUUTTSS