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DAN
YOU NEED TO THINK A BIT MORE
''L.T.I. LONG TERM IDIOT . What planet are you on? Vod is not up 4% this morning.''
????
and?
it is called a stock market
'' This is a serious forum, please don't take the Mikey. PLEASE. Go away''
??
then why have you made a post saying that VOD is not up today giving the impression that I said that it would be ???
could do without a waste of time nonsense posts.
* Effect, not effecting
Which is exactly what most are saying. The buybacks wont have the effecting on the individual share price that LTI is suggesting. so if it doesn't affect the SP by the value he hopes but the shares in circulation drop by 20% by the time all the buybacks are done. If the SP hasn't moved, then what effect does that have on the Market Cap? Answers on a postcard
SPT did a BuyBack ... everyone thought great buying buy whilst shares cheaper than the year before...but.... towards the end of that ..they announced that there was a strong slow down of orders from China ...share price plunged .... nobody cared two hoots about cash spent on shares , or did any knid of maths related to that
..order slowdown .... sell,sell,sell
Thats just not correct. Little chance the volume players are buying for the dividend to then sell, to drive the ex div drops (which mostly mirror the dividend yield %). The market opens with a drop similar to the dividend % just recorded, before any real volume has started. It drops because the company has just committed to paying out a sizeable value of cash with no value to the business. Yes the movements post the open is then is some way due to what you mentioned. hence why sometimes the % drop is better or worse than the equivalent dividend % that was recorded
So your belief is that the 4 billion in cash doesn't matter as traders are more concerned with "other things"? That's the belief as to why it will have no impact on the market cap when it's gone?
" Then why does the share price keep going down ex-divi?"
various reasons ....often the SP gets over bought for a dividend ..especially a final dividend ... traders then sell and know to sell down the share, out of the over bought price cycle , and go elsewhere ..come back later ...buy back lower ... depends on the market sentiment overall and the sector
LGEN - Final Div coming soon, see what happens after ...often drops back , down to a low again ... take the DIV , sell..buy back lower ...new price cycle again lol
"" if the 4 billion in cash being converted into shares and then cancelled will impact the market cap and I'd say it clearly does "
I would say as previously that it does not ...because ..the traders wont really give too much of a damn about it .. "
Won't they? Then why does the share price keep going down ex-divi?
" if the 4 billion in cash being converted into shares and then cancelled will impact the market cap and I'd say it clearly does "
I would say as previously that it does not ...because ..the traders wont really give too much of a damn about it ..
why? ...because they are focused on other things
You can happily do Buy Backs ..but.. The Investment Bankers will sell,sell,sell if other factors affect their view on your revenue or earnings prospects ... they wont care two hoots about your daily share buys
Guys, this buyback argument has been going on for years over on the Lloyds board and still is, do yourselves a favour and drop it
just wish the share price up, if it's up it gives people choices sell up and get their money back , or if they believe the future of this company will be rewarding for them hold
this has been down for too many years
"There is some notion of belief that a Market Cap is some carefully worked out figure taken from a load of fundamental figures or formulas
...when in fact
..it becomes nothing more than a result of the sentiment around the day to day Trading around FOMO or FOBI "
No one is suggesting that the book value and market cap are always, or ever, equal or that the share price is always based on pure logic unaffected by sentiment.
The discussion is around if the 4 billion in cash being converted into shares and then cancelled will impact the market cap and I'd say it clearly does, as the source of the cash is from a nonrecurring source, so won't be replaced.
For those that think it won't. Why? 4 billion in cash isn't a difficult to value asset that is worth a lot when managed well or a liability when it's being mismanaged. It's just cash that will be gone.
Mmm
thanks for that input. Not sure anyone was disputing that
Listen carefully: The selling price of a share increases by 5% during a day; it follows that the "market capital" of the company also increases by 5% in that day irrespective of any other events in that day.
Are you saying that a companies book value of assets have absolutely zero value in the SP? You don't think II will use it for there risk / reward on buying into a stock? and therefor if there is a safety net of a high NAV in comparison to the MV then that results in less risk. Less risk means more potential investors in a company, more investors means more demand means potentially a higher share price.
Its not the be all and end all, totally agree, but it 100% plays a part in an investors appetite in the stock.
There is some notion of belief that a Market Cap is some carefully worked out figure taken from a load of fundamental figures or formulas
...when in fact
..it becomes nothing more than a result of the sentiment around the day to day Trading around FOMO or FOBI
... some Traders battling it out between each other trying to decide if War is coming to the Middle East, Egypt economy is going to collapse or not, Putin is going to throw a wobbly across Europe, The FED has or does not have any idea what it is doing, whether Biden is going to borrow and put more and more Dollars on the Poker table of war funding .. or anyone one of a dozen other such Bear sentiments
I think you are all wasting your time delving into some mathematical idea of what the MCAP might relate to , or not
..the truth is...nobody cares a damn about the MCAP .... just a matter of whether market players can buy cheaper tomorrow than today and whether Put Options are stronger or weaker than Call Options etc
"And there we have it KevRow, because you have just demonstrated that you are confusing market capitalization with book value. Two different things.
But you are not alone, most on here dont seem to get this."
No, I'm confused as to how you can think a business that has 4 billion in cash can then not have 4 billion in cash and be valued the same. Name dropping different methods of valuing a company doesn't explain this.
Some of the posts that have appeared on here recently confirm an oft repeated family proverb of mine:- "Much of the population is unable to think clearly and logically and that is why people do things all the time which do not make sense." Putin is a first class example if you want one.
And there we have it KevRow, because you have just demonstrated that you are confusing market capitalization with book value. Two different things.
But you are not alone, most on here dont seem to get this.
"The problem is when inexperienced posters come onto the board and spread the half truths they have read or misunderstood from elsewhere. They are so convinced they know what they are talking about when clearly they do not."
The problem is when so called "experienced" posters think that they know better than everyone else but seem to struggle to give any illustrative examples of anything they say other than to repeat it over and over as if it's self evident.
"It also clear that the MC is not affected by the buy back."
Really? How will that work? 4 billion less cash and less shares in issue might not impact the share price but how on earth will it not impact the market cap unless the market values 4 billion in cash at zero? It will be cash at this point, so no need to keep going on about "non performing assets".
I dont see eye to eye with LTI on many things, but when it comes to buy backs, I share LTI's understanding of the mechanics.
Clearly if the SP is lower, a set amount of cash will buy more shares. The more shares are bought back, the lower the total amount of divi expense, or the reduced share number can pay out an increased divi at the same overall cost.
It also clear that the MC is not affected by the buy back.
Lastly, non performing parts of the company are a liability to Vodafone, not and asset, and as far as Voda are concerned they therefore carry no value, other than asset value.
The problem is when inexperienced posters come onto the board and spread the half truths they have read or misunderstood from elsewhere. They are so convinced they know what they are talking about when clearly they do not.
"THINK AGAIN - who on earth would be investing with that sort on devaluation.
I think you will find that the market will value Vodafone on it's profitability which will not be affected negatively with the sale of non performing assets.
The market cap is likely to remain at about the same level or increase from full year results time as the benefits of the vodafone investment materialises"
As has been mentioned multiple times, no one is saying that the share buybacks will reduce the share price but there is no reason for it to material change the share price either. No one, from what I can see, are saying that the buybacks will drive down the share price, so the buybacks are no reason for them to sell. You, on the other hand, seem to be tying yourself up in knots trying to rationalise why the share price going down is a good thing for the next 12 months or so and anyone who suggests they would want the price to go up in that period is somehow missing the bigger picture that only you can appreciate.
These "non performing assets" clearly have value. 4 billion for Vodafone Spain and 8 billion for Vodafone Italy. So when that cash generated from their sale is spent, it's not money they will ever get back and it will have an impact of the market cap. Using the cash for buybacks probably won't change it much at all due to the two largely cancelling each other out.
"You have a lot to learn "
There is that phrase again. You seem to be describing a situation where a company buys back it's own shares using cash it has generated, and would be expected to generate the same cash again, rather than cash from one off assets sales.
Wither way LTI is muddling up 2 different events and claiming the buybacks is the catalyst for the SP increase.
Take 2 identical company's (both have underperforming elements - to the same degree, everything is exactly the same at this point)
Company A keeps the assets and continues to have depressed earnings / cash flow as a result of this
Company B sells this assets, the earnings and cash flow improve as the drag is now gone.
Think we all agree Company B would see some improvement in there SP?
Now, lets say both company's decided to sell the assets.
Company A keep the cash and reduces the net debt position resulting in a NAV of say £10b
Company B uses the cash to buyback shares, lets say £4b, resulting in a NAV of say £6b
Which company would probably have the higher market cap? A surely? But which would have the higher share price? Neither immediately! I've tried to lay this out very binary and yes other factors contribute to the market cap which cloud the impact of buybacks.
However, as I have already mentioned there is an element of supply and demand of the shares left in issues, if you are removing 20% of the shares then the remaining shares are harder to come by, so an increase is SP would come about, but not as a direct result of the buyback.
Try reading the date Daniel instead of your usual name calling and calling people idiots - you are obviously on the bottle again or your drugs arnt working . The article is the 15th March !!
L.T.I. LONG TERM IDIOT . What planet are you on? Vod is not up 4% this morning. Come on please talk sense. This is a serious forum, please don't take the Mikey. PLEASE. Go away.
''Vodafone shares gain on Italian sale and share buyback''
https://www.sharesmagazine.co.uk/news/shares/vodafone-shares-gain-on-italian-sale-and-share-buyback