RE: IFRS Update6 Jul 2023 00:57
Anon3
Shell & BP are 2 of the worst companies going when it comes to buy-backs, There strategy is all wrong, the exact opposite of what's in the best interests of there long term shareholders.
Oil & gas price is cyclical, they used to issue shares instead of cash when the oil & gas prices were low and couldn't fund the dividend from cash-flow. Those shares were issued near the low's of the price cycle. When the oil & gas prices recovered & they were free cash-flow positive. They started to do buy-backs again, only at a share price that was anything from 30 to 100%+ of the price they had issued the shares at.
They should have set the money aside in a separate pot (to help offset there debt burdens in the meantime) until the down cycle began. As it neared the bottom that is when the buy-backs should have started & been weighted so that the lower it went the more was spent on the buy-back.
Most here won't remember the L&G £1B buy-back that started just ahead of the financial crash of the banks in 2007 (It was the only 1 I can recall them doing ever since the late 80's). They were paying north of £1.50 a share to begin with & completed it with the share price around about £0.50 as I recall. If they had been lucky enough to have started it like 6 to 8 weeks later ( or the crisis to have happened those few weeks earlier) they would have bought back a wad of shares sub £0.30 instead of the initial £1.50. I calculated the timing of it meant there were over 300M shares in existence today than there would otherwise have been.
Take that into account regarding the dividend & everyone's dividends from 2007 onwards would have been 5% high, as would earnings etc to.
You don't just do a buy-back you do a buy-back when the share price is near the lows of the last year - 2 years. That's how you add value.
Maybeonedaysoon,
Yes Aviva's share price has gone down, but the TNAV has increased because of it, so will future EPS & the dividend you get, because the profits get distributed out between fewer shares.
It takes time to really stand out, but buy-backs done in the right way add long term value for shareholders - both in dividends & EPS and takeover value.
LOTM
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