Member Info for OneStep

General elections are 10 a penny and are usually only a minor significance to the country and 66% of the electorate need to vote for one to take place.
But for something a significant as the Brexit referendum it needed just the PM call it and only 33% of the electorate to vote for it.
Now that's what I call Irony.

"Well said leave the EU wasn't about money"

Obviously you're blind and didn't see the red bus.

TFI you invited me to comment on this post about buyback price uplift

Tue 13:47
"Actually the benefit should be looked in percentage terms rather than pence. So if the buyback ends up taking out 2.3% of shares then this is the gain. In pence terms, that changes depending on share price. So based on 2.3% and a 61p share price the benefit would be 1.43p."

Does not show how to calculate the %
The data to calculate the % is not (as far as i know) easily available.
This makes it completely non-useful for anyone wishing to know what the uplift will be.
The example mean't to clarify just mystifies the calculation as 2.3% of 61 is not 1.43
a good indicator of your numeracy level
The example overstates the % in order to mislead. The maximum % achieved at any time during the buyback is around 2.19%
Reading Gayboy's posts you certainly seem to have misled him.
Overall I assign a negative value to this post.

You have dismissed this as a trivial matter.
So in your opinion accuracy, posting false misleading information, competentency is a trivial matter.
I think you'll go to any lengths to try to support your view on buy backs by continually overstating its likely eFfect on the share price. A bit like £350m on the side of a bus, a least their was a believable calculation to support that number. You've just pick numbers out of thin air.

At this stage I need to issue an appology.
I appologise unreservedly to all parrots for comparing them to TFI.

Gateboy or are you really the no-expert LTI

"It could have been 1.5p v 1.7p if the price had gone the other way."

"The price moves at leat 0.2p every trading day more or less."

Read my post if you don't understand buy backs.

The range of all projections from the start of the buy back is 0.013111 to 0.013883p so its has moved 0.2p on exactly zero days.

To post was made after around 75% of the buy back had taken place so it is known that its not going the other way.

Clearly you've been paying too much attention to LTI's posts or is you talking to yourself.

Gateboy

"Splitting hairs over a small fraction of a penny because the share price has moved downwards is rather petty."

A share price of around 70p is required for 1.5p.
So LTIs statement is equivalent to saying the share price WILL be around 70p doesn't seem insignificant to me.

No financial professional would ever have made the statement in that form.

Its clear that LTI's claim to be a financial expert is in great doubt and LTI's facts should be treated with great scepticism.

LTI
"Cannot be bothered to recalculate benefit in pence all the time depending upon change in share price"

But you have 'recalculated' as the Lloyds stated it to be 1.4p when the buy back was announced !

Since the announcement new shares have been issued and the share price has been falling consistently so there is no way it could be higher, I can't see how any body with half clue would be predicting 1.5p.

Also you set it out as a fact rather than an opinion and dismissed other posters views on the subject as being not worth while.

My latest projection To Buy Back Completion share price increase is 1.3111p.

See below for full details.

LTI posts
14/8 : "So the current buyback WILL add about 1.5p value to each share than without the buyback taking place"
15/8 : "for the n'th time the buyback will add about 1.5p to the value of each share."

I'm looking forward to the about 70p share price needed to get to the about 1.5p at the completion of buy back.
If it doesn't get to around 1.5p, perhaps LTI will take responsibity and compensate every body.

I have to admit that the second post brought to me an image of a demented parrot continualy squawking 1.5, just can't shake it off.

As of Today

Date : 17/08/18
Total Shares : 71,329,579,907
Buy Back Shares : 1,368,122,142
Buy Back Cost : £867,959,743
Share Price : £0.600186
Market Value : £42,811,015,246
Buy Back Share Price Increase : 1.1295p

At Projected Buy Back Completion Date

Date : 10/09/18
Total Shares : 71,109,581,012
Buy Back Shares : 1,588,121,037
Share Price : £0.604226
Market Value : £42,811,015,246
Buy Back Share Price Increase : 1.3111p
Buy Back Share Price Increase Range : 1.3111 to 1.3883p

Calculation Basis

The market valuation would be the same if there was no buy back !!!!

Current Total Shares is the Number in the last 'Voting Rights RNS' reduced by buy backs on/after the date of the 'Voting Rights RNS'.

No account has been taken of any share issues after the date of the last 'Voting Rights RNS'

Current Share Price is the average price paid for buy backs on the current date. If no buy backs then the closing UT price.

Shares will continue to be bought up to the maximum of £1billion at the average daily rate since the start of buy backs at the current share price.

The share price on buy back completion is the current price

The range is the minimum/maximum share price increase for the projection calculated after every day since the first buy back.

Current Position

Date : 15/08/18
Total Shares : 71,424,668,940
Buy Back Shares : 1,273,033,109
Buy Back Cost : £810,857,831
Share Price : £0.604226
Market Value : £43,156,642,015
Buy Back Share Price Increase : 1.0581p

At Projected Buy Back Completion Date

Date : 21/09/18
Total Shares : 71,111,636,782
Buy Back Shares : 1,586,065,267
Share Price : £0.604226
Market Value : £42,967,499,846
Price Increase due to buy back : 1.3183p
Range of Buy Back Increase : 1.3183 to 1.3883p

Calculation Basis

The market valuation would be the same if there was no buy back !!!!

Current Total Shares is the Number in the last 'Voting Rights RNS' reduced by buy backs on/after the date of the 'Voting Rights RNS'.

No account has been of any share issues after the date of the last 'Voting Rights RNS'

Current Share Price is the average price paid for buy backs on the current date. If no buy backs then the closing UT price.

No account has been taken for the effect of the stock going ex-dividend before the projected completion date.

Shares will continue to be bought up to the maximum of £1billion at the average daily rate since the start of buy backs at the current share price.

The share price on buy back completion is the current price

The range is the minimum/maximum share price increase for the projection calculated after every day since the first buy back.

ASP
Under retained value its not a worry because the market value is maintained ?
So the company could £100k each for the 99,999 shares and the market valuation will be still be £100k ?

Any doubts about the retained value rule of thumb not being an absolute rule and has no limitations ?

It has also caused you to construct this strange company which I guess you got to through retained value reasoning.

I guess the process was
Let the company value = £100,000 and there be 100,000 shares
The value is calculated from the P/E (you don't say what it is) and as the P/E doesn't change by a buy back this ensures the market value is the same after the buy back.
Now you actually need some money to buy the company, the only place you can get the money from is profits so you company has enough cash generated from surplus profits to buy the shares, you don't value the amount.
The surplus implies to me that the company is also paying a dividend.
For retained value to be true you need this to be a realistic so lets examine the company

Market Value = £100k
Cash Position = enough to buy the company, in your words very expensive, even as much as 99,999 * £100k !?
Profit = Cash position + dividend return
P/E = £100k / greater than £10 billion = very small !

You or any other retain value devotee didn't notice how far from relatively your scenario is.
I haven't a better example of a scenario set up to prove a concept but actually disprove it !
Perhaps you are not a retain valuer and just set it up to help me out.
If so thanks.

This is more interesting and less depressing than talking about the post brexit UK economy.

Best Regards

PS I asked my friend whether he would sell his share for £100k, He said no chance have you seen the P/E for the company the Market Value is currently under valuing the company by a vast amount. Still unshakeable in the infallibility of retained value.

Asp a question for the retained valuers on your scenario you asked me.

"So, the company is valued on a P/E of its earnings ie £100k with 100k shares @£1 each,
Suppose from surplus profits the company buys back 99,999 shares, so now there is only 1 share, what price would you place on that one remaining share in a company that is valued at £100k based on it's earnings"

How much did the the company pay for the 99,999 shares ?

Bear in mind that I have a friend who owns 1 share is a totally unshakeable believer in "retained value". I understand all the shareholder follow an investment forum on which an ultra intelligent ex city worker keeps saying so it must be true . So when the company asked for permission to perform the buy back I've never seen any body happier.
He can't stop boasting that he's going to make £99,999 on his £1 share.
His reasoning is that he's going to hold on to the share because in a years time it will be worth £100,000.
If you were a share holder with 1 share what would you sell for ?

Asp for the market evaluation of the described company to be only £100K I would suggest that there must be a enormously high risk factor driving it down, so much so that it is likely that the company is about to go into liquidation perhaps I've overvalued may be the share price should be zero.

We are now moving on -
you are correct that my model works on the current value of the company rather than the market value.
You are not correct in saying that a company is solely based on its earning capability.
I don't think you'd have ever get 2 people to agree on market so I would suggest that it is based on assets, estimated profit, risks as reasonable simplification.

so to continue our the example

the company makes £9,000 profit
Without buy back our total return on investment = 9,000/100,000 = 9%
In my example with buy back TROI = 9,000/90,000 = 10 %
But the TORI shouldn't change so the market value should be 100,000 i.e. the buy back value is retained in the market value.

QED end of story not quite with have not dealt with every factor.

What about risk, Risk has risen.
If the market valuation says at £100,000 then more of your capital value is at risk because market value exceeds by the true value by an additional £10,000.
On an individual basis any loses will be higher as the number of shares has fallen.

Risk has risen so I would expect the market to require a higher TORI%.

If you believe the buy back value is retained in full then you believe that the level of risk should not change the market value. Good for the city boys getting their bonuses not so good for the the investors.
I'm sure failure to take risk into account, using rules of thumb like retained values contributed greatly to 2008.

Any nearer to deciding what happens to the share price, perhaps it is a great active of cowardice on my part to retreat to my original post to say it is the market sentiment based on the new level of risk.
Hey if it was simple then we'd all be much richer.

I would also say if some one comes up with a simplistic answer then don't believe it, ASP1 congratulations you get the gold star for questioning my original example, even though I've still managed to return to it !?

Asp glad someone is enjoying this, I think being able to explain the situation is a good test of understanding rather than just following the 'this is what happens' brigade.

if you have cash of £99,999 in company which is valued at £100,000 then the assets, profit generation, ... must be only valued at £1, so easy the share price would still be £1.

Consider the from a point of view of buying the company.
Before the the consolidation you buy all the shares for £100,000 but have £10,000 in the cash which you take reducing the net cost to £90,000.
After the consolidation, if value is retained, then you still pay £100,000 for the shares but there is no cash so you have paid £10,000 more for exactly the same thing but you say this is correct because a buyback has taken place which has added £10,000 value ?

Someone asked about Lloyds, the valuation of Lloyds has fallen since the buy back started so in my example

The company value falls by £9,000 pounds.
Without buy back there are 100,000 shares so each share falls 9p.
With buy back there are 90,000 shares so each shares falls 10p.
Share price lower with buy back !!!!

'Locked In Value' is not an investment term I'm familiar with and a quick google search does not produce any results which, as far as I can see, are applicable to buybacks ?

Lets examine the situation from the share holders point of view.

Before the buy back the share holders have 100,000 shares @ £1 = £100,000 value

After the buy back the share holders have £10,000 and 90,000 shares.
A claim is made that the shares have a 'locked in value' of £100,000 so the share holders now have £110,000.
Where did the £10,000 come from ? The Magical Money tree.

There is a claim that £10,000 can be given to the share holders and the value retained by the company !

On the balance sheet cash has been reduced by £10,000, where is the compensating £10,000 shown on the balance sheet to retain the company value ?

The problem with share buy backs is they take place over a period of time so its not obvious what effect if any they have on the company value.

When cash is returned to the share holder via dividends then the share price falls and the company value falls, why no 'lock in value' in this case.

If it looks too good to be true, ...

Anybody would think that people can be conned in to believing you can have your cake and eat it.

No wonder the 2008 crash happened in people in the city believe this.

Asp1
The share price was a 90p at the beginning of the previous year giving a valuation of 90k and rose to £1 during the year as earning were announced.
You're trying to tell me a company reduces its cash by £10,000 and its value does not change might as well just borrow loads of money and give it to the share holders if the cash position does not matter !

Asp1.

If the company makes a profit of £10000 then its value goes up £10000 so the company value is £100,000.

The Lloyds BOD policy is to return value to the share holders via dividends at projected rates.
The projected rates are set a level that they believe will be achievable through company profits.
The share holders have authorised this policy.
The current announced dividends meet these projected rates.
They have obtained permission from the share holders to buyback shares with profits not returned.
The buyback reduces the amount of profit needed to meet the dividend policy so makes it more likely that it will be achieved and in uncertain times seems to be a reasonable call.
The policy is not to return all profits to the shareholder via dividends.
A reliable, relatively high, dividend income from investments is attractive to investors.
Unexpected special dividends can be problematic in terms of planning tax liabilities.
Those who reinvest their dividends are probably better off as its cheaper for the company to buy than each individual ?
A buyback is really just the BOD directors buying shares for the shareholders, it increases your share of the company.

"there is a notional revaluation.."

Notional meaning : not evident in reality; hypothetical or imaginary

Out of Interest perhaps someone could give the notional revaluation of the company in my example ?
It's always useful to get more information on imaginary world the market operates in.

Mathematically buybacks do not change the share price or the share holders value.

A simple example that even people who worked in the city, ex-stockbrokers, brexiteers, remainers can understand.

Investor as 100 shares in a company which has 100,000 shares @ £1.
Investor Value = £ 100, Company Value = £100,000 Number of Shares= 100,000 Share Price = £1.00
Company buys back 10,000 shares @ £1 and cancel them
Company Value = £90,000 Number of Shares =90,000 Share Price = £1.00 Investor Value = £100.

Any changes in the share price are due to other factors or the sentiment generated by the buyback.

The investor owns a higher % of the company and thus will benefit more from the company earnings and be more affected by change in the valuation of the company.

The typical behaviour in the house of commons makes me wonder why anyone would choose to be governed by them if there was an alternative ?

The problem is we've been buying back the peaks. The average price paid for buybacks is 65.6 the current price is 62.85. If we have buying back the dips then the current price would be higher than buyback price ! Don't buy on falling prices.