Ashtead Share Discussion Threads

[ianwwwhite] 14/12/2017 10:08

Hi fenners

I agree, we are handicapped by lack of detailed insight into AHT's actual strategic intent.

If anyone does write to GD and get a reply I hope that they will share it with this board.

In the meantime I share the views expressed by others here that the management have done an amazing job turning AHT into a well run growth business, <> 45th in the FTSE100 and extremely cash generative.

Personally I am happy to rely on this long standing management team's judgement for the time being. When the facts change, I'll change my opinion!

[fenners66] 14/12/2017 09:37

Share price can always rise or fall regardless of results - but I think this time the headline of buybacks has spooked the market.

[fenners66] 14/12/2017 09:36

When I think about it - there is no business case for the share buybacks -

and at the end of the day they are paid to improve the business.

If they do that year over year then the share price will follow.

Not withstanding given the nature of the business this will always have hi borrowings and a valuation of the business where the Enterprise Value matters taking into account debt and equity, QED reduce debt and improve business and at the same time equity value should rise.

[mjcferguson] 14/12/2017 09:25

Many UK investors now also pay a higher rate of tax on dividends than capital gains.

[ianwwwhite] 14/12/2017 09:16

2flatpack

Thanks. We're on the same page ...

[fenners66] 14/12/2017 09:11

Well that list of priorities adds some comfort that they may have just been playing with eye catching headlines.

All the same its a B/S headline to play with and like I said yesterday it was obvious that there were plenty BETTER places to use the cash.

I see the explanation that yanks pay less CGT
so what % of the register is held by yanks ?

My assumption here is that any investment company gains will be subject to CT not CGT, whether they are US or UK

[2flatpack] 14/12/2017 09:07

Ian
Tend to agree but I think there is some thing in the wind ,possible a large acquisition they have seen on the horizon.
Cheers

[ianwwwhite] 14/12/2017 08:51

For those that prefer their posts short and to the point, my post above may be summarised as:

'we've got shed loads of cash coming in, don't want to pay down debt or raise the dividend to a point where it becomes a problem when the cycle turns, so we've gotten ourselves a war chest'

That's my take for what it's worth....

[ianwwwhite] 13/12/2017 23:11

Interested to read all the views posted on the share buyback.

The webcast earlier today was quite informative and I have paraphrased Geoff Drabble's comments below:
-------------------------------------------------------------------
Share buyback announced, minimum £500m and up to £1bn over 18 months. Don’t want to commit to more than £500m at this juncture, given the wide range of value creation options available and our strong cash flow. Wish to retain flexibility to generate additional eps growth. Intention is to utilise additional £500 on buybacks, but may be utilised on Organic and Bolt-on opportunities if they arise.
--------------------------------------------------------------------



Also from slide 22 of the webcast presentation, this background:
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Capital Allocation Priorities with strong cash generation and encouraging outlook
• Organic fleet growth (£708m to date)
- Same store
- Greenfields

• Bolt-on acquisitions (£298m to date)

• Returns to shareholders
- Progressive dividend policy (interim div increased 16% to 5.5p)
- Share buybacks (minimum £500m and up to £1bn)
---------------------------------------------------------------------

Hope this helps, but if you don't agree, don't shoot the messenger! (E&OE)

[rescuer] 13/12/2017 22:01

Clarky, the buy back continues, this will still continue north, albeit at a much more sedate rate.

well done all.

hope you all have a great Xmas, a prosperous and healthy new year.

glenn

[discodave4] 13/12/2017 21:48

Citi downgrade from buy to neutral may also contributed to the drop today:hTTp://www.proactiveinvestors.co.uk/companies/news/188724/ashtead-shares-fall-after-citigroup-downgrades-stock-to-neutral--188724.htmlDD

[discodave4] 13/12/2017 20:29

2flatTend to agree with you, only concern is the last buyback they stated "up to £200m in 2016/17", this time it's "at least £500m.....". My guess is though that it will be just £500m which spread over 18 months is the equivalent of £333m pa, doesn't sound as bad! (gulp). They will not get anywhere near a billion, that's just PR IMO, and no way should they fund a buyback from debt.As for the director sells, well why not, how many on this board either put a short on or sold around results? (I did neither by the way except had a cheeky top up this morning). Also, think the three that sold tend to always sell on the same day (they did in June as well) so although timing not great for pi's they do seem to try and manage a single hit to the share price DD

[james97] 13/12/2017 19:41

They did not give a justification for the buy back other than that their confidence in the business made them comfortable with slightly higher leverage. With interest rates on the way up I would be happier with lower leverage.

[2flatpack] 13/12/2017 18:11

Evening all
It seems the only problem you guy's have is the buy back.
I think this is aimed at the US who seem to prefer it to the divi.
Is this to do with their tax system?
I must admit the amount seem excessive and I suspect other motive especially as the previous buy back was not fully utilized.
I must admit to being naive compared to you men of the world ,and am very interested in your thoughts .
As for business case for the buy back I can only think its to keep the US holders sweet.
I would point out they utilized about a quarter of the previous buy back, is this one all smoke and mirrors too.
As for this board running out of ideas! snowball in hell comes to mind.
Cheers

[bracke] 13/12/2017 17:32

Good day 2flat

Your charitable thoughts are an example to us all.

[fenners66] 13/12/2017 17:31

I have not done the results presentation yet. Is there any justification - business case in their for the buybacks?

[fenners66] 13/12/2017 17:30

I have no qualms with their selling, it looks as though they got their heads together to go as one - which in view of the market reaction was exactly the right thing to do.

Imagine the guy selling the most shares tells the FD he's thinking of doing it - she is smart enough to see what would happen and therefore moves too. Then the other cottons on and follows suit.

I just have a problem with the decision to launch the buyback - that clearly is Meant to be for the benefit of the share price ie shareholders and they were shareholders who had already committed to selling.

After all before this news came out today - I was already questioning motive and if there was some incentive for retiring chairman - and lo it seems like the announcement was meant to benefit even those shareholders who sold yesterday.

[bracke] 13/12/2017 16:49

Good day clarky

I expect their advisers told them what market reaction would be to the buyback so they were probably ready to go. The amount they sold suggests that they are not expecting a continuing rise above 2100 any time soon.

EDIT

Added last three words.

[clarky5150] 13/12/2017 16:33

Not the best timing for their actions it has to be said. Let's hope it was just a little Christmas spendo but seems strange directly after announcing a buy back which should have locked in the push North

[bracke] 13/12/2017 15:58

Thanks mts

I suppose once the announcement was made 'insider dealing' no longer applies but it smacks of sharpish practice. The Directors were obviously ready and had probably primed their brokers.

[mtsblogs] 13/12/2017 15:25

bracke - my estimate is within 30 minutes of completing Q&As.

This is from the price of that sale - it was only in that range between 10:15 and 10:45 in the AM. Because the filings have to be in order and because later transactions were cheaper, the share price had to be a) in that range and b) be falling.

[bracke] 13/12/2017 15:06

How soon following the results announcement did the Directors sell their shares?

[fenners66] 13/12/2017 14:36

One thing this buyback has done is distracted attention away from great results - more stupidity.

One alternative is that the directors knew they were going to sell shares and the impact that would have , so to try and make up for that, the announcement of buybacks was to suggest they could prop the share price up for the remaining holders to somewhere near where they would sell at.

Which does not make for a business case !

Its vanity that they do not want to be blamed for the share price fall.

At the end of the day I get that they want to bank profits - we all do , its no good just on paper. So sell the shares and be damned , you managed the business up to this level if you want to sell - no problem.

But do NOT blow a £bn because you want to be loved !

There has to be a business case - that's what you are paid for !
Make more profit , hold less debt, realise more cash, pay higher dividends!

Do that and the share price will take care of itself !

[fenners66] 13/12/2017 14:00

For me it was stupid execution even if that is what was intended.
Increase the yield by a more substantial number and tell us how the free cash flow may lead to debt repayments in the future as well and the market would have had them up more.

By now they have already sold or would they be so audacious as to announce that the company bought some shares on the same day ?!

I think not.