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So day 1 vodafone buys back 1% of shares. The SP doesn't move due to buybacks? Only what the Market decides? Haven't you just agreed we are correct then? If the buybacks don't cause the SP to move then x less shares = lower market cap.
It seems one or two cannot comprehend, and need the same thing repeated to them over and over and over and over and over again until maybe then it sinks in (must be age related.)
The market decides on the valuation of Vodafone on a daily basis.
NOTHING TO DO WITH BUYBACKS, which the purpose of them is solely to reduce share capital
But he's not saying its not am investment, he's saying the market cap drops, shares in issue drop = SP stay the same, so his investment is flat. I personally believe there will be some SP growth but not in a linear way. Reduced float will reduce supply and demand should improve as the future earnings improve due to loss making markets being exited, but not purely as a result of buybacks. Ironically I was in barc, they spent last couple of years doing sizeable buybacks, it wasn't till a while after they finished that the SP went north, loads of factors involved I get it. But at no point did you see x shares purchased and cancelled and a correlation to the SP compensating
Dan
''Thank's a lot Fleccy if you can help me on this one. ''
Flec is not too keen on buybacks.
You have already been given relevant info regarding buybacks - it is up to you to digest properly which would help with investment decisions.
The current market cap is under 22 Billion Euros. Your stated believe is that a 4 Billion investment in Vodafone shares would reduce that figure by 4 Billion, which with your thinking would make Vodafone not a very good investment to be purchasing .
"" 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"
This is a concern that I have. They couldn't make money in Italy and Spain so rightly jumped ship, they state they haven't been able to get a decent return in the UK for years and won't in the future without a merger and I'm not sure if the Germany results are going to be too pretty in the short term at least. They just don't seem to be able to get a decent return in Europe at the moment and I'm not sure that the net asset value reflects that yet.
Desperate Dan, Fleecy make it up as he go along.
.
I nows morre than I letts on you no.
He be like a potatoes wafle wiv out tha potato
Accolade this week goes to Newsid, who just edged it , well done
Vod closing Sp 5th Apr 68.58p
Speech Speech Newsid
Full list will follow Enjoy your weekend Atb
Fleccy. Hello, I wonder you could help me here. Vod's market cap is it's share price times the shares in issue. My question is, if vod buys back shares in a buy back scheme, will this mean as there are less shares in issue after the buy back, the market cap will fall unless the share price rises. If the market cap doesn't fall then it would seem to me that a share buy back is a one way upward bet as each share holder will own a larger slice of the company. It seems to me that after a share buy back the market cap should fall, but because each share will own a larger share of the company then it will balance out. I am all for buy backs if the managment think that is good thing, but it is good to fully understand how it all works. Thank's a lot Fleccy if you can help me on this one. Cheers & have good one.
" 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.