ITC market cap bigger than Bats surely not. Perhaps they take BATs over, lolhttps://m.investing.com/news/stock-market-news/itc-surpasses-bat-to-become-thirdlargest-tobacco-company-93CH-3253212 |
 Value: you asked the following question - presumably directed at me:
ValueHurts 9 Dec '23 - 22:39 - 8107 of 8110
If you are not confused why are you talking about buying out a partner in a real small business when we are illustrating buybacks?
I'm certainly not consfused. But perhaps you are as 10+ hours earlier you posted the following example, a decent enough example, but I think my expansion on the 'small business buy-out' was more accurate.
ValueHurts 9 Dec '23 - 10:24 - 8086 of 8110
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.
It's probably best if we don't talk anymore about BB's. |
I'm not going to bother talking about buybacks anymore. The management understand so eventually we will get them anyway. You can create a synthetic dividend from a buyback if you don't like them. |
value i would give up if i was you.. |
With the ITC holding they could sell and return the proceeds to us as a third of market cap. Hardly any of our actual cash flow comes from ITC. From the piece below you can see how they have invested loads into low return businesses. Perhaps we can get oral nicotine over there and get a royalty but I think they would try and screw us on that to be honest. If you have read Barbarians at the gate you will know how tobacco companies can be used to great giant conglomerates without regard to shareholder returns. |
If you are not confused why are you talking about buying out a partner in a real small business when we are illustrating buybacks? As to how you talk about assets and cash being taken from the company to buy back shares this is true but a company is valued on the present value of its future returns to shareholders not on the basis of its current assets. Especially in tobacco. |
Increase debt to buyback shares? hard to justify sometimes.
It depends upon the cost of capital, the profit/dividend and value of assets.
Warren Buffett has strict rules as to when a share buy back is justified.
If Buffett has loads of spare cash earning very little and he thinks his share are undervalued he buys back.
..but not if he sees a better bargain elsewhere. |
Value: my post 8099 is MY understanding of a classic BB. Is my understanding wrong? Like discO I'm not at all confused. |
My last response as bored now.Try reading my post 8082. Pmsl, not in the slightest confused. |
I really cannot believe this. I was asking if you would like the shares bought from the market as from a mathematical perspective on an individuals ownership in the business this is exactly the same as a buyback and cancellation. I was trying to help your understanding but you seem to have got even more confused. |
Great read Berny3. Thankyou. |
Correct.You are now repeating what I've posted but it doesn't change your misleading comment that you get more shares. |
Let's try the five people owning a business and one wishes to leave - in more detail.
There are two routes to this. The leaver wants 20% of the value of the company. Let's say that's £20 as the company is valued at £100.
The four remaining owners can each pay into the company £5 which is then paid out to the leaver. The value of the company remains at £100 and each remaining owner owns £25 in value - the original £20 plus the £5 they chipped in.
The other route, as you followed, causes the 'company' to pay out the leaver. You used 'earnings' in your example. I'd prefer to use the word assets. It may well have been earned profit. The leaver gets £20 out of the company. The company is now worth £80. As it's owned by the four remainers they stil own £20 worth each. They personally have not placed any more money into the company and they have not gained any increase in share ownership/value.
This second route is the one adopted by BB's. We, the current shareholders, are not asked to contribute more money towards the BB. It is the company's assets that are being used to fund that BB. So, there are indeed less shares in circulation afterwards and, equally, a lesser amount of cash held as assets.
And, Value, just as a reminder of your post #8064:
"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?"
You did indeed suggest you'd get more shares - albeit delayed by a year.
Now, doctor, where's that dark room? |
If you had 3 percent of the shares and they bought back and cancelled 1 percent of shares outstanding you would now own 3.03 percent of the company. Your ownership of the company would have increased. |
Ps read post 8090Have a good day |
So the very basic example of how it is exactly the same is wrong? Please explain. |
"It?s exactly the same as giving you more shares.?"No it's not. |
I never said you gain actual shares with a buyback. I said it is exactly the same from a mathematical perspective. Please look at the example I gave. This is primary school stuff. |
ValueYou posted you get more shares, you simply dont, |
mcunliffe
i would certainly agree with you about when the company buys back shares regarding getting value.standard life often were buying when the price was high which gave little concern for the investors,bad management in my opinion.. |
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. |
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