Avon Technologies Share Discussion Threads

[jw330] 08/2/2022 08:22

some good news here on contracts and not a peep from anyone..must be a room full of shorters....shows that we may have hit the bottom on prices.

[p1nkfish] 07/2/2022 23:09

We have to disagree on that. When the company believes (or its major shareholders do) the best use if capital is to buyback their own undervalued stock then they should do so.

The big boys want it, the big boys get it.
28th Jan - "As separately announced today, following consultation with our shareholders, we are launching a share buy back of........"

Worth reading up on Shareholder Yield by Meb Faber, the analysis is useful.

[jeffian] 07/2/2022 22:50

It may make sense to buy back shares at less than NAV (£6.70-odd) but "value" is entirely subjective, and that's my point. It's whatever Mr. Market says it is and there are many, many examples (e.g. my WTB one above) where he doesn't play the game and mark up shares in proportion to the reduction of shares in issue as they are bought in and cancelled.

Directors need to understand that they can't 'manage' the share price, and it is not their job to do so other than by the time-honoured methods of increasing revenues, profit margins, profits and dividends and let the market do the rest. When Aviva used to be called Norwich Union, it wasn't as highly rated as its peers and the Directors took umbrage that their 6% dividend yield was nearly twice that of other insurers. Accordingly, they announced that they would be "rebasing" the dividend in line with the others and halved it. The market promptly halved the share price to leave the yield untouched.

[p1nkfish] 07/2/2022 17:41

Shareholder yield is a key metric and here it makes semse to buy back at discount to value.
This should be closer to £15 than £11 imho and anyone not happy can sell to the company rather than be trapped or drive the price lower still, selling when there is reduced demand.

[jeffian] 07/2/2022 16:45

"Weak holders" can get off the register any time they want! Let's just hope the remaining "strong holders" actually see some benefit. The theory (reduced shares in issue = higher EPS and NAV therefore higher value) is all very well but time and again I have seen vast sums of cash disappear in a puff of smoke to no obvious benefit to remaining shareholders.

When Whitbread sold Costa Coffee, they "returned" £2bn(!) to shareholders via a share buyback. At that time the shares were around £45-£50 and had the cash been distributed to all shareholders equally, it was worth around £12.50/share. Shareholders who didn't sell now have shares worth £30 (having been down to around £26). I wonder how much "value" they feel they have had "returned" to them?

[p1nkfish] 07/2/2022 14:06

The biggest shareholders will have had a chat. Buyback can be more tax efficient.
Big boys usually want total shareholder yield increase and as tax efficient as possible.
Buyback can be future enhancing too as price closes the valuation gap so bigger overall return to company. Getting debt down makes sense unless the cash allocated can get a better return than the interest rate. Buyback makes sense here imho as return should be good over time. Also gets weak holders off the register.

[ch1ck] 07/2/2022 13:30

The board seemed confident in product sales and company growth. I just don't see it as a great way to boost the priceYou are better off halting the debt and being cash strong and a special dividend

[c0cky] 07/2/2022 09:18

I'm presuming the board knows more than we do and that buying at this price is cheap in the long term. There is a small dividend due in 3 days as well.

[ch1ck] 07/2/2022 08:26

Avon is wasting cash by buying shares above current priceThey are being fleeced

[justiceforthemany] 01/2/2022 14:34

Email
[e-mail]

[justiceforthemany] 01/2/2022 14:33

I have emailed him directly FYI
No response

[ch1ck] 01/2/2022 08:05

You should have asked him yourself if you feel so strongly about it.I'll I'm doing is reporting back so people are better informedThe share price is improving which is what I expected and what I reported would happen.If you believe buy if not sell and leave the forum

[justiceforthemany] 31/1/2022 20:56

ch1ck did you not ask the CEO why he has not added to his stake even though shares are down 70% from the peak? Also his 50K shares were 'awarded' to him, he did not spend a single penny.

Reward for being a total failure.

[ch1ck] 31/1/2022 08:30

I waited till today to see how the share opened and how much Avon bought on Friday.They did not buy many but the share price rose 5%I bought more today

[ch1ck] 29/1/2022 17:32

Talking of selling the company.In essence this is an American company with a British HQ.One manufacturing plant in the UK suppling some components for the US companies of which there re seven.These components could easily be made in the US.The buying power of the US government is way more substantial than the UK's but the NATO frame work is quite big. So at the moment it works.Avon is small fry for some of these big companies and would be a good fit Watch this space

[conwyrebel] 29/1/2022 14:18

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….

[p1nkfish] 29/1/2022 09:07

That doesn't mean you can't agree with their assesment.

Try getting truly independent analysis for a stock with Avons market cap.

[glavey] 29/1/2022 05:18

Edison is company sponsored PR not independent research.

[ch1ck] 29/1/2022 04:49

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

[p1nkfish] 28/1/2022 20:05

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.

[p1nkfish] 28/1/2022 20:01

Glad I bought, this should respondvnicely to the buyback imho.

[jeffian] 28/1/2022 19:49

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!

[ch1ck] 28/1/2022 19:46

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

[p1nkfish] 28/1/2022 19:46

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.

[jeffian] 28/1/2022 19:18

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.