ValueI will add that if you held 3% of the shares in issue and the buyback reduced the shares in issue by say 1%, then yes your holding would increase In percentage terms but you still haven't gained any actual shares which is what you are saying, which is complete rubbish. |
I am perfectly aware of how a buyback works. I am trying in the most simple terms I can to explain to you how your share in the business increases with buybacks. |
Complete nonsense.I see it's a waste of time trying to discuss because it's clear you don't actually understand the mechanics of a share buyback - the share issue is reduced, the number of shares available to purchase / sell has reduced, nobody is given the shares, nobody can buy the shares that the company has bought, they are cancelled. |
If you cant understand that there is nothing more I can do for you. |
If 5 people own a share of a business and 1 of them wants to leave they decide to use some earnings to buy out that person. The company buys the share and cancels it. The remaining holders have increased their share in the business to a quarter each. If 5 people owned 100 shares each and we did the same but instead of cancelling the shares from the leaving partner 25 shares were distributed to the remaing 4 after being purchased it would have the same effect. The remaing partners would now own a quarter of the company each. |
?You own more of the company when they buyback shares. It's exactly the same as giving you more shares.?How are buybacks giving shareholders more shares?, that's what you posted which is completely wrong and misleading. |
Dillards 100x your money since 2009. Sales are exactly the same. Just buybacks and cost control. |
Value"You own more of the company when they buyback shares. Itâs exactly the same as giving you more shares."Completely disagree, shareholders do not own more of the company - the company doesnt buy shares and distribute them to existing holders.Buybacks reduce the shares in issue thus the earnings per share increases and thus in theory the share price on the market should increase by the same amount (some also believe the rating / PE ratio will also increase due to the BB). The US institutional investors favour buybacks so it has become a bit of a fad and what the yanks do we tend to follow. It's a marmite strategy as the underlying business is not actually growing earnings plus they at times continue buying without determining the equivalent rate of return. Put simply how much funds would be required to be invested in the business to increase profit/earnings versus the amount of shares bought and the subsequent increase in profit / earnings / eps. |
Have you looked at Dillards, carmax, autozone, next etc? That is all you need to see. The management of the company understand this so eventually we will have the buybacks reinstated. |
Value: Thanks for the dark room suggestion and that I should 'work this one out'.
I was rather hoping you would present a decent argument in support of Buy Backs in much the same way I am trying to present an argument for a better use of cash by a company.
This is a long running debate that has been discussed on many threads on these boards. We once had a vote on BB's - those in favour and those not. The not's won it by a factor of two to one as I recall.
I am genuinely looking for good aspects of BB's - I haven't found one provided by you.
The best I have come across over the past months is one that mentioned Warren Buffet; Warren believes that BB's should be treated like the purchase of shares by investors, only buy when the price is low. |
I think you need to sit in a dark room and work this one out. I don't have time to explain basics like this. Company buys its own shares in the market. If it chose to distribute them to remaining shareholders or shred them it has exactly the same effect. |
 Value - I'm really keen on clear wording;
In #8064 you said:
Would you be in favour of the company buying shares at these prices from the market and then putting them in your account so your holding increases as other holders sell? The next year you receive more dividends and more shares?
Then in #8074 you said:
You own more of the company when they buyback shares. It’s exactly the same as giving you more shares.
Really?
This is NOT how buy backs work in practice. Rights issues give you more shares - if you choose to buy in. Buy Backs purport to benefit holders but it is arguable.
I can agree with your that any dividend being distributed after a buy back will provide a greater amount PER SHARE for the remaining (lesser number of) shares but only if the management of the company elect to distribute either the SAME monetary value as before the BB or, of course, a higher value. Generally, companies tend to keep the pennies-per-share payment the same year on year and hence, as a long-term holder I would not reap any additional benefit. I am aware some companies raise their actual dividend pence-per-share payment year on year.
I would rather a management (those who 'understand') use their spare cash to grow the bloody company I am invested in rather than but their own shares back. It i growth that wins in the end. If you bought every one of your own shares back you'd be a unlisted, private entity.
If you spent the money instead in innovative expansion, acquisition, new product development then you'd have a behemoth of a company.
But is needs management with vision. Sadly lacking in ALL areas these day Value. |
I think you just picked the wrong stock to be honest. You need decent management. With cigarettes you have to be particularly stupid to mess it up. Imperial is doing well and gobbling up their shares currently. You can see which way the EPS is going when comparing with sales and that's up. Dividend up, shares price up. And they will keep buying back shares indefinitely. Nice |
the management get lots of money out of buy backs as well so they love them
after watching my investment in standard life what was a fine company and all the money spent on buy backs i was made poorer buy every buy backs,but the management just kept picking up their bonus''s.
all that money which if they wanted to they could have given it back to we the shareholders ,of course they would have been out of pocket.
if they cannot invest it wisely they should not be in the job .. |
If you think they don't benefit shareholders have a look at the long term performance of Next and the share count. In the US perhaps Carmax, Apple or even Dillards. We have the potential of getting very rich. |
You own more of the company when they buyback shares. It's exactly the same as giving you more shares. Do you not understand this? The market cap of the company is irrelevant. Your share of earnings increase and your share of dividends increase. I'm glad the management of these companies understand. |
Value: the mathematical point rarely plays out in the manner you describe.
In my opinion, the reduction in the number of shares resulting from the company buying them in the market causes:
a) a reduction in the capitalisation of the company if the share price does not rise in relation to the lesser number of shares
b) a potential reduction in the amount of money available for the next dividend partly as a result of spending some of it on buying the shares in the market.
The BB absolutely does NOT increase the number of shares I hold. That could only happen if I were to buy more or a rights issue occured and I subscribed to it.
There's no end to the imaginative benefits portayed for BB's when, again in my opinion, they generally only benefit sellers.
I'm in here for the long haul and for the dividend income (re-invested generally into the same company shares). |
From a mathematical point of view that's exactly what a share buyback does. |
Like Buffett says, buy when blood on the streets. |
Redbaron did well on the 6th bought at 2246. 79p already well done RedB |
I think next years play has to be keep buying the strong dividend shares.
Interest rates will start coming down in the summer and that will force people away from fixed income / money market funds and more towards equities. Naturally they will want the cash cows for a bit more defense so that's my call.
Yes labour will win but it's possible the election won't come until this time next year.
Good luck all 👍🏻 |
Time to decide next years investment strategy.
holding about 30 including bats and imb.
bought uk bonds recently going well.
This year has turned out ok in a flat UK market.
Election year, Labour will win.
Much to think about. |
The 29% holding BATS have, the 15.5 rupee per share dividend, equates to BATS receiving £535m this year.
ValueHurts: BATS buys it's own shares from the market, and puts some of them in my account. That's a novel concept. Doubt it will catch on ;-) |
Agree, ITC even paid a special dividend this year, its a great investment for Bats. |
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