RE: Latest FinnCap report...20 Sep 2022 10:59
With regard the buyback(s). Without a doubt, there are two sides to be listened too when arguing the pros and cons of buybacks, so I guess consensus here is unlikely. For me, the $75 million Tremor spent on the last buyback strikes me as dam good value. Quite apart from the analytical arguments around ROE, ROA, reduced share count/PE, a counter for SBC and all the rest, it was for me just plain and simply good value and a good time to do it, given the economic environment and the undervaluation of Tremors stock...My maths here may attract some correction but my calcs indicate that Tremor raised c. $147.9 million from the Nasdaq IPO, equivalent to 15.5 million shares at $9.5 (c. £7.80) per ordinary share. From the buyback just ended, they bought back c.13.7 million of those shares at an average price of c. 45% less than they sold them for on the Nasdaq…..I think that is good business…..To date Tremor has accumulated 42.6 million Treasury shares from buybacks. I wouldn’t be here if I didn’t believe that Tremor will reward me one day in the not-too-distant future and when it does, those Treasury shares are going to be worth a lot of money. Assume a return to post IPO value alone at £8.50. At £8.50, that little pile of Treasury shares will be worth c. £360million ($418 million). And so, for me, opportunistic buybacks, quite apart from the other beneficial impacts as above mentioned, are a worthy investment.… As far as I am concerned, while the exchange rate is as favourable as it is and the stock as battered down as it is right now, Tremor can have another go at buying its own shares, with my blessing. In my view, another $20 million buyback right now makes perfect sense. It’s money in the bank for a future date whereas a dividend is a complete waste of cash.
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