Agreed - share buy backs can be viewed as a consolatory gesture by an mgmt wanting to keep shareholders off their backs and give them space as they are out of ideas. Special divi is real cash distribution. I don’t see the point
in either for Avon! Mgmt simply need to get their heads down and grow the damn sales of the business, fix their disastrous PR and sell the company…. |
That doesn't mean you can't agree with their assesment.
Try getting truly independent analysis for a stock with Avons market cap. |
Edison is company sponsored PR not independent research. |
Research note released today by Edison hi lights the risk reward, https://www.edisongroup.com/publication/refocused-protection-set-to-resume-growth-2/30413/In summary stock is undervalued, fall in share price is disproportionate to the failure of Armour business. Provided there are no hiccups there should be strong share price recovery due to steady sales |
jeffian, tax is the puff of smoke.
Consider adding on weakness and sell into the buyback at a higher price. If fair value is close to £15 the company would be mad to give a taxable event to shareholders rather than buy back stock. Today's buyers are not crazy. |
Glad I bought, this should respondvnicely to the buyback imho. |
Never mind "efficient", does it actually return value. You've given some examples but I would guess that the vast majority do not.
Yes, there are tax implications (and 'Return of Caital' is now taxed as if it was a dividend) but I'd rather have the money and be taxed on it than see it disappear in a puff of smoke! |
Jeffian I agree, and did say to The CEO that investors buy into a share that they believe is doing better and NOT because there is a share buy back program. When they see the management buying into the share with their own money that is the vote of confidence that moves the price.He responded by saying he held 60000 shares bought last year so was also feeling the pain. All I can say is the price was negative prior to the AGM and ended up significantly.I believe this could be the turning point for the share price but with a holding of 25000 shares that is enough for now |
Overall it can be more efficient to buyback with a lasting eps benefit. Ideally done at time of undervaluation and low forward multiple. Timing matters. I think Avon have the timing right. Alternative has larger tax implications. |
 Thank you for your feedback, Ch1ck. However, I remain of the view you first expressed about share buybacks - that they are financial 'smoke & mirrors' with little hard evidence that they actually (as opposed to theoretically via purely mathematical increases in EPS and NAV) increase the market value of shares. As you say, in my experience, quite the opposite. Whitbread "returned" £2bn to shareholders via buybacks following the Costa Coffee sale. The shares were then worth around £45 and that amount in cash would have been worth around £12.50/share. The price today? £29.75/share (having fallen as low as £20). Do WTB shareholders who held onto their shares feel they've had much of that £2bn "returned" to them? A similar situation at EiGroup (Enterprise Inns as was) which spent £1bn buying back shares up to £8/share before crashing to 25p(!) and eventually being taken over for 285p/share.
I would have taken issue with Avon management trotting out the line that "it was seen a way of returning shareholder value". It returns ALL of the value to some of the shareholders who sell....and may no longer be shareholders! The only way to return value to all shareholders fairly is to pay a Special Dividend or Return of Capital. |
Continued:Further investment into body armour would not generate enough returns. Focus now on existing and new products in production and development which look to be first class.I also asked about the share buy back program and it was explained after the meeting that after consulting with institutional investors it was seen a way of returning shareholder value .I was very impressed with Paul McDonald CEO and Nick Keveth CFO, both of seemed passionate about moving the company forward |
Just got back from the AGM and I must say I was very impressed with both the site and the board.Two questions were tabled on line and I asked for an explanation for the body armour failure and what synergies could be brought in to the business.It seems the customer asked for a design change and this was extensively independently tested in the UK and US without and failures.During the US government observed testing one plate out of 800 failed the ballistic tests.That meant that that bid was now over for the company |
With this float the buyback isn't likely to push the share price but will give some a methid to exit as they need a buyer - the company.
I have come across buybacks pushng the price up - look at SYS1 and SGE.
SYS1 is extremely tightly held so any demand shifts it.
This is just another way to return some capital and get the sellers off the bus else its a death by a thousand cuts. |
18BTI attending the AGM and will ask the question today.Two things to note for me is why make the decision less than two weeks away from the new CFO STARTING.Also with more years in professional investing than I care to remember I cannot recall share buy back moving the share price significantly higher. All that happens is the market knows there is a signalled buyer in the market and picks up these shares cheaply.The company needs to produce solid results nd reduce debt |
Chick - I'm no defender of management, but net debt at 30/9/2021 excluding leases was clearly $26.8m and only $55.9 including property leases (IFRS16). So not an unreasonable move unless you are short. |
A quick call to an activist investor will sort these idiots out |
What the Fu.... SHARE BUY BACK WITH 193 million worth of debt.What are these clown's thinking |
Pathetic management! Shareholder value already decimated by shockingly poor capital allocation. Best not attempt any more value destroying acquisitions so buy back shares instead... The share price has haemorrhaged because of poor stewardship! |
Thank you. Edison reports are useful for the factual information they contain but when it comes to opinion and comment, do bear in mind -
"This report has been commissioned by Avon Protection and prepared and issued by Edison, in consideration of a fee payable by Avon Protection." |
New research report published by Edison: |
His first real test as CEO and failed miserably, talks a good game. |
Those attending the AGM - this shameless and incompetent CEO must be booted out. |
The new Bean counter buys 13 shares Stop the f...in press |
Will watch this with interest. |
Rich Rubber would have been better 😂 |
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