Ashtead Share Discussion Threads

[amaretto1] 17/9/2021 07:37

Seriously don't know what planet you are on ....This whole tedious argument of dividend growth ...When your capital growth is exceeding nearly every other listed company in the last 20 years !!

[fenners66] 17/9/2021 01:29

Your Sage of Omaha has held shares in individual dividend payers for decades though.
Moreover he changed the investment approach from buying stakes in shares to buying companies whole around 1999.
Clearly the companies bought whole pay dividends and cash to BH as the holding company.
He can hardly "sell " some shares if he wants a dividend on a lot of their own holdings.

As stated earlier whilst a share looks like it is going up - why sell ?
Its nose /spite face clearly.
However does not mean one can stay in beans without earnings.
AHT has enough cash to do it ALL.
But the dividend is an area they can strengthen.

Buffet on one of their dividend paying investments

"important – is our ownership of $5 billion of preferred stock issued by
Bank of America. This stock, which pays us $300 million per year, also carries with it a valuable warrant allowing Berkshire to purchase 700 million common shares of Bank of America for $5 billion at any time before September 2, 2021. At yearend, that privilege would have delivered us a profit of $10.5 billion. If it wishes,
Berkshire can use its preferred shares to satisfy the $5 billion cost of exercising the warrant.
If the dividend rate on Bank of America common stock – now 30 cents annually – should rise above 44 cents before 2021, we would anticipate making a cashless exchange of our preferred into common. If the
common dividend remains below 44 cents, it is highly probable that we will exercise the warrant immediately before it expires."

Makes it clear that the dividend rising is the driver ,not selling the stock.

There is more

"a few educational words about dividends and taxes: Berkshire, like most corporations, nets considerably more from a dollar of dividends than it reaps from a dollar of capital gains. That will probably surprise those of our shareholders who are accustomed to thinking of capital gains as the route to tax-favored returns.
But here’s the corporate math. Every $1 of capital gains that a corporation realizes carries with it 35 cents of federal income tax (and often state income tax as well). The tax on dividends received from domestic corporations, however, is consistently lower, though rates vary depending on the status of the recipient"

Clearly if you believe he does not want dividends - its not what he is explaining there.


On buybacks :

From the standpoint of exiting shareholders, repurchases are always a plus. Though the day-to-day impact of these purchases is usually minuscule, it’s always better for a seller to have an additional buyer in the market.

For continuing shareholders, however, repurchases only make sense if the shares are bought at a price below intrinsic value. When that rule is followed, the remaining shares experience an immediate gain in intrinsic value. Consider a simple analogy: If there are three equal partners in a business worth $3,000 and one is bought
out by the partnership for $900, each of the remaining partners realizes an immediate gain of $50. If the exiting partner is paid $1,100, however, the continuing partners each suffer a loss of $50. The same math applies with corporations and their shareholders. Ergo, the question of whether a repurchase action is value-enhancing or value-destroying for continuing shareholders is entirely purchase-price dependent.

It is puzzling, therefore, that corporate repurchase announcements almost never refer to a price above which repurchases will be eschewed. That certainly wouldn’t be the case if a management was buying an outside business. There, price would always factor into a buy-or-pass decision.

When CEOs or boards are buying a small part of their own company, though, they all too often seem oblivious to price. Would they behave similarly if they were managing a private company with just a few owners and were evaluating the wisdom of buying out one of them? Of course not.

It is important to remember that there are two occasions in which repurchases should not take place, even if the company’s shares are underpriced. One is when a business both needs all its available money to protect or expand its own operations and is also uncomfortable adding further debt. Here, the internal need for
funds should take priority.
This exception assumes, of course, that the business has a decent future awaiting it
after the needed expenditures are made.

The second exception, less common, materializes when a business acquisition (or some other investment opportunity) offers far greater value than do the undervalued shares of the potential repurchaser. Long ago, Berkshire itself often had to choose between these alternatives. At our present size, the issue is far less likely to
arise.

My suggestion: Before even discussing repurchases, a CEO and his or her Board should stand, join hands and in unison declare, “What is smart at one price is stupid at another.”


So there is a price at which it is stupid , or simply borrowing to buyback shares.

AHT is faced with paying what 160% more for shares and still borrowing money (ie borrowings could have fallen more) to do it.

Its easy to say Buffett says buybacks good , dividends bad. The reality is somewhat different for the companies HE invests in.

[trt] 16/9/2021 23:05

Chart wise the gap needs to be filled. Could see profit taking leading to a retrace possibly back to £55 ish. Shame to lose the gains of today in the short term but that's the way the market works after all.

[perfido] 16/9/2021 21:56

Thanks DD! No doubt other opinions will be available :-}

[disc0dave45] 16/9/2021 21:50

Yep, they've stated that the share buyback will enhance eps by 2% to 3% pa.Completely agree with what you and the Sage of Omaha think about dividends!.

[perfido] 16/9/2021 21:26

Dividends versus Share Buybacks?

I would go with Warren Buffett's advice, buybacks make perfect sense as long as the price is right, and they provide shareholders with a bigger stakeholding in the company by virtue of the reduction in the number of shares in issue (excluding treasury).

In the last reported full year AHT purchased 19.7m ordinary shares at a total cost of £445m under the Group’s share buyback programme, costing equivalent to £22.59 per share (AGM Report Sept 2020).... look at the price now!

Dividends on the other hand reduce the shareholders stake, by allowing cash to walk out the door.

Buffett's view is that if you want to take some income then sell some shares, and that makes perfect sense to me.

In Ashtead's Capital Allocation Policy the amount allocated to buybacks is simply driven by that which is available after organic growth, bolt-on M&A and dividends, a reasonable and balanced approach IMHO - personally if I didn't agree I wouldn't own the shares.
.

[perfido] 16/9/2021 20:29

".... in equity markets, Ashtead was the standout gainer, rallying after it said its annual performance would beat its previous expectations as the equipment hire company reported a 53% increase in operating profit for the first quarter".

FTSE 100 - Risers

Ashtead Group (AHT) 6,162.00p 5.26%
International Consolidated Airlines Group SA (CDI) (IAG) 142.46p 3.89%
Flutter Entertainment (CDI) (FLTR) 15,025.00p 3.84%
Rolls-Royce Holdings (RR.) 109.00p 3.37%
Intermediate Capital Group (ICP) 2,238.00p 3.04%
Compass Group (CPG) 1,488.50p 2.76%
Whitbread (WTB) 3,276.00p 2.70%
Informa (INF) 526.80p 2.41%
Smith & Nephew (SN.) 1,353.50p 2.27%
Smurfit Kappa Group (CDI) (SKG) 4,185.00p 2.20%

Well done to the management and staff at Ashtead/Sunbelt, great result!
.

[disc0dave45] 16/9/2021 19:32

Quadruple witching day tomorrow, so some of today's gains may be given back......then again! :)

[trt] 16/9/2021 15:43

Share price should finish 7% up at this rate.

[bracke] 16/9/2021 15:26

Good day uppompeii

Hmmmmm a little late in the day with that question. Depends how much risk you want to take. Given that you have held so long I presume you have deep pockets and long arms.

If you have come to the conclusion that enough is enough you can cover now or wait for a retrace. If you take the view 'in for a penny, in for a lot more' you can hold in the hope/expectation that at some point the market will return to some form of normality and you can cover for a lower loss.

[disc0dave45] 16/9/2021 15:16

So on ex div day you truly think you've gained some "free" income in your account....don't quite get it somehow. If you want 1% pa then yes sell a share or two that's made 80 times that and buy some Heinz lol :)

[fenners66] 16/9/2021 15:10

Looks like URI's share price has reacted to the AHT news for once.

[fenners66] 16/9/2021 15:08

That smells fishy dave...

long term maybe fish n chips , but that means you would have to sell some without dividends. If you see that share price growth continuing , why sell?
So (since there also is a dividend valuation model) let them pay a higher dividend (its massively covered anyway) and keep us in beans whilst we wait.

[disc0dave45] 16/9/2021 14:57

Capital return over 400% over the last 5 years, div yield has been what?, less than 1%. Personally would hold this even if no dividend.Prefer tins of caviar not beans!.

[trt] 16/9/2021 14:30

Could finish the day nearer 7% up at this rate !

[trt] 16/9/2021 14:29

Here come the Americans loads of buy trades - hold onto your hats !!

[uppompeii] 16/9/2021 14:26

bracke, should I close that short you suggested I open at £10.00?

[fenners66] 16/9/2021 14:07

Share price looks good on paper, but day to day it makes little difference.
If you want to hold on to winners.
But dividends pay for cans of beans...

[disc0dave45] 16/9/2021 13:59

No pleasing some folks! lol

[trt] 16/9/2021 13:55

Could see a 6% rise in the share price by the end of the day at this rate.

[bracke] 16/9/2021 13:41

"Can we have more debt repayment , less interest and a much higher dividend ?"
============================================================================

You want even more!!!

[fenners66] 16/9/2021 13:30

£61 previous broker target achieved.
Surely if that means anything.....

Saved $10m of interest in the first qtr alone. Now with renegotiated lower bond interest and lots of cash generation despite , bolt ons and investment in more plant.

Can we have more debt repayment , less interest and a much higher dividend ?

[trt] 16/9/2021 13:04

Could see US investors buying once the Dow opens - glad I topped up early this morning.

[palwing32] 16/9/2021 12:46

Mind the gap.