RE: buy backs21 Feb 2019 09:54
ICL1960 - If I may be so bold as to follow on from your post and using your example:-
Let us say a company has 100 shares, and £100 cash in the bank.
This means each share is worth £1, going by Net Asset Value.
If you buy back 50 shares using £50, and cancel them, then there is £50 left in the bank, and 50 shares in issue, so each share is still worth £1.
But, market condition means you buy them for £1.20 a share, ie, current SP is in excess of NAV (as is currently the case with LLoyds and was throughout last years buyback), then there is only £40 left in the bank and with 50 shares in issue, each share is only worth 80p NAV. The only positive return to shareholders is to the lucky few who managed to sell at £1.20, the cost falling on the remaining loyal shareholders whose NAV per share has diminished!
Am I missing something?