Aviva Share Discussion Threads

[kenmitch] 29/3/2021 12:38

I forgot! Whitbread had a rights issue last year to raise £900 million INCREASING the share count after reducing it with the buybacks. Shareholders stumping up new money to reverse part of the earlier buybacks!

[edmundshaw] 29/3/2021 12:31

Aviva PLC 6,125% euro bond repurchase today using now SOME of the zillions that Aviva has saved in dividend payments...

I agree running the business well is good. Repurchases significantly below NTAV is not going to be bad long term provided the business is run well into the future, I agree with cjac.

Given the rebased dividend is affordable fromthe remainder of the company, logically buybacks should resultin higher dividends per share if the total dividend payment stays constant...

[fenners66] 29/3/2021 12:29

The problem is - even if 100,000 shareholders of a huge quoted company get the disadvantage of a buyback for remaining shareholders and the "all things being equal" - of course they never actually are - gains to EPS and therefore directors' bonus schemes - it's not down to the 100k to decide.

A handful of large investment fund managers will hold sway with the directors. They may be "representing" their investors (yeah right! ) but they have the financial muscle. They get the directors' ears.
Mr X's bonus depends on making an extra % point before .... so if you agree a buyback and create demand to inflate the share price for a short term which coincides with the cut off date for my bonus...... Then I sell run a mile , false demand from the company ends with the buyback , share price falls , but I'm long gone with my bonus so who cares.

The fund manager does not even have to sell , he just marks to market on the right date. Meanwhile the % take from the underlying investors rises and his company is happy too. After all - none of those involved would suffer - if it goes pear shaped its the underlying investors funds that suffer and if its a very large company many funds will have a stake so they cannot even suffer by comparison...

Markets had a great year , good your 1% just cost you more ....
Markets had a lousy year (buybacks dried up , share prices reverted to non-false market) you still pay 1% of what you have left , lucky you!

[scrwal] 29/3/2021 12:21

A buyback via the market does not reward shareholders who hold onto their holding - all that happens is shares are bought from willing sellers. The only gain for a longer term holder is that there are fewer shares participating for future earnings and cash paid out as dividends.

In Aviva's case there has to be capital erosion as the cash comes from asset disposals only not from cash generated from a bumper trading year - special divs from a lot of companies is usually excess cash generated from trading so there is always an expectation that the special isn't a one off and will be repeated albeit at unknown amounts , but this is not the case with Aviva.

[muscletrade] 29/3/2021 12:12

@oggy Pre announced debt reduction

[kenmitch] 29/3/2021 12:11

Excellent post fenners66 and I agree with everything in it. Thanks for posting it. So much is written on the supposed plus points of buybacks it’s not surprising that some swallow it all. Some will continue to swallow the theory and what’s really amazing they also swallow it and don’t seem to notice when buybacks cost them dear as was the case with Whitbread.

It’s true, as I posted yesterday, we can never know whether the share would have gone even lower or fallen less if they hadn’t bought back. But what those holding the shares while the share price crashed should surely have realised was that they didn’t get a single penny from their supposed buyback “reward.”;

Directors often do very well out of buybacks with increased bonus payments thanks to their bonus payments often being based on eps. Directors of so many Companies must be delighted that so few see through it all!

And aren’t the chances of buybacks being lauded again on this thread very high, despite whatever factual evidence is given to contradict their conviction? That just shows how effective the one sided case for them has been. How often do we see an a Investment Magazine or website article making the same points as fenners66 has today?

[brian3777] 29/3/2021 12:10

Hi Fenner66.
Everything you say is correct.
If anyone would like too see how NOT to reward shareholders.
Look at the disaster that Whitbread made.

Hi YF23_1.

If you buy back shares the cash that was in the company is lost.
The net asset value (N.A.V.).REDUCES WITH EVERY SHARE THAT IS BOUGHT BACK.

You must remember that for every transaction in the accounts there must be corresponding effect, Double entry book keeping.
So if the shares are bought back at a higher price than the N.A.V.
You are destroying the hard earned shareholders cash.

Brian3777

[oggyrocks] 29/3/2021 11:47

Any clues on what early repurchase means ? (In the news section at 10am)

[woodhawk] 29/3/2021 11:23

Excellent points, fenners66 - particularly re loyal shareholders potentially reinvesting. I'd vote for special divis all the way - especially as most of my shares are already ISA'd and SIPP'd.

[kenmitch] 29/3/2021 09:55

Airport100 has posted that ramp on over 60 ADVFN threads.

[klotzak] 29/3/2021 06:23

Whatsup. I think you've taken things the wrong way. I was actually trying to offer any bits of advice I could think of, seeing as you mentioned a problem with tax.I don't know or care about your finances, and I doubt anyone cares either. No harm meant or done.

[ianood] 28/3/2021 22:07

yf23_1 - MNG would set them back £6-7 bln and would fit like a glove as others on here have suggested?

[yf23_1] 28/3/2021 21:54

re buybacks: I think you have to look at how the market rates the company.

If it expects some sort of growth, then part of that rating will be the cash used towards growth. If you give it back, then the rating will fall.

If the company is ex-growth but throwing off cash then its probably better to just give the money back as divis.

If the company is rated on NAV as opposed to some sort of growth expectation (like Aviva) then buybacks could increase the NAV and hence the share price
However, in Aviva's case, the large cash element could seriously affect the share price making it unviable to use the full amount.
But, by affecting the SP, you therefore have your answer.
Which is, to use all options...some buyback some increased divi and some specials spread over future years... and it also leaves your options to use the cash for takeovers or investment in the business.

[whatsup32] 28/3/2021 21:51

klontak. Comments I’ve made are general comments , you have no idea of my wealth , tax bracket or even how many Aviva shares I hold . Furthermore you are presuming ‘high rollers deal in millions’ here.
So kindly keep your snide remarks to yourself and hopefully we can all enjoy a friendly thread with different views.

[wskill] 28/3/2021 21:16

Yes let’s be honest Aviva is as experienced in buy backs as acquisitions and if they have any sense then it’s the last thing they should consider,hopefully a special dividend will be what they decide to do after the past incompetence in buybacks and acquisitions.

[ianood] 28/3/2021 20:04

klotzak - that was objectionable and unnecessary - filtered!

[cjac39] 28/3/2021 19:57

Why are you patronising a perfectly sensible person such as whatsup. He seems like a reasoned fellow to me.

Your discussions on buybacks or not are somewhat ordinary. Apparently a buyback falls or wins on how the share price behaves subsequently. Patently a bit narrow.

In net asset value terms we as shareholders should celebrate a company buying its stock through tangible asset value; a better purchase than external assets as well known. Above net asset value very questionable unless a super return on capital invested is understood.

[klotzak] 28/3/2021 19:22

Whatsup, if you have an accountant perhaps you should upgrade? You clearly are either not listening, or are not acting on their information to be tax savvy!And then you spend your time on here, a free thread where other high rollers deal in millions! Ok.

[whatsup32] 28/3/2021 16:32

Unfortunately you seem to be nitpicking here . I have stated in above post that if a company is undervalued to a tune of c50% then it makes sense for a share buyback.

I repeat I couldn’t careless if they buyback , special dividends , get taken over or whatever as long as share price goes up.

[kenmitch] 28/3/2021 16:15

Unfortunately whatsup32 you haven’t proved and we cannot ever prove that buybacks worked. As I’ve already explained and so have others (if you care to read and absorb those posts) shares like Microsoft and Kimgfisher and the vast majority of shares over the last 12 months have not gone up because of their buybacks. They’ve gone up for all sorts of reasons including the obvious one of more buyers than sellers.

And you seem to have ignored Spud’s post pointing out a key reason why Microsoft’s share price has soared.

We can never PROVE that buybacks worked and we can’t prove that they didn’t work either as the share would have gone up or down regardless of them. We can sort of prove when they didn’t work if the share price subsequently falls,but again we can never know to what extent the buybacks limited the fall or had no effect at all on the share price. We CAN know when buybacks are a waste of money. And if you look at the link I posted you can see clearly that the last Aviva buyback was a waste of money.

Note these two words in the heading:- “disastrous buybacks.” Can you put a gloss on that article for us!

Do you still really want Aviva to risk making the same mistake again? Aviva is well managed now so I’m hopeful they won’t. But some with their heads in the clouds insist on sticking with their opinions no matter what evidence there is to suggest they might be wrong.

[whatsup32] 28/3/2021 15:54

klotzak

Thank you for that , I have an accountant

[klotzak] 28/3/2021 15:45

ISA or SIPP!!