M&g Share Discussion Threads

[willywonka12] 11/11/2022 16:17

It can't be buy back making it rise unless they found another bone in the cupboard

[willywonka12] 11/11/2022 14:22

Back above £2 soon

[uppompeii] 05/11/2022 14:11

Jubberjim, it's not uncommon with funds that have illiquid assets. Aside negative publicity in newspapers that don't really understand these things it's not really relevant to anything else.Much like the market value adjuster on the old unitised with profit funds, investors should be well aware of the risk of restricted access to capital in certain circumstances. Won't stop them moaning though.

[jubberjim] 04/11/2022 23:53

Both mng and lgen are stated to be gating ? Their property funds

Would this be one of the reasons that the share prices of both these otherwise dependable shares have been lagging their peers

Will they be able to maintain their usual dividend policy

Any help appreciated

[aleman] 30/10/2022 17:27

I invest for income therefore not too bothered about sP drop (over the short term)as it is an opportunity to improve my yield.

Only if dividends are stable and buy-backs don't threaten longer term pay-outs. Perhaps, I should have checked dividend histories in the earlier example:

Packard had just cut their dividend 30% before it doubled after the 6 years in question. Big lots +40%. Macy's -60%. Xerox is only marginally up (adjusted for stock consolidation). Kohl's dividend was axed for 4 years and then reinstated to the same level. I make that argubaly +16% from 2016 (+3% classing Packard at +33%) in the end but with a chequered history which probably accounts for the 12% portfolio value loss. How does that compare? It's tough finding DJI total payout but a DJI ETF increased income 45% over the period.

In the cases picked in the article, buybacks were far from a simple route to higher eps and dividends but that's not to say all cases will be so. Clearly, each case should be considered on it's own merits with a big dose of caution. I'd say buy-backs weaken balance sheets and make weak or cyclical companies weaker (opportunity to exit) but might enhance dividend and capital gain for strong companies. I'd prefer the cash to look for the best home home I can find myself, rather than have directors with other motives decide. I don't consider that is what I pay them for.

[tag57] 30/10/2022 16:18

Or maybe exclude any buyback effect from EPs where BoD incentive is based on EPS. At least then you would know that their decision making may not be on selfish grounds.
Personally I think the share price will find its market price regardless of a BB programme therefore why incentivise II to sell. I invest for income therefore not too bothered about sP drop (over the short term)as it is an opportunity to improve my yield.

[aleman] 30/10/2022 15:20

The 100 companies with the highest buybacks as a percentage of market cap have a median return that is even worse at minus 9.5 percent in the last year. These companies include Big Lots, Hewlett-Packard, Macy's, Xerox and Kohl's.

That article I posted was over 6 years old. I thought I'd check out the 5 shares mentioned. Performance was roughly -60%+, +100%, -35%, -40%+ and -25% respectively. Overall that's about -12% over 6 years versus the DJI average going from 18k to 33k and the Nasdaq from under 5k to over 11k. These indices could be skewed by non-paying growth stocks so I looked for a dividend paying index to compare and found this article. The graphs at the bottom suggest +60% would be a likely outcome for a dividend paying portfolio. The above 5 mentioned would have returned about -12% if equally weighted so they would together have been terrible choices. I don't know how representative they were and each must stand on its own merits, of course. They don't have to do badly and Packard did well but the weight of evidence seems to suggest you should look long and hard at any of your shares that announce buy-backs.

[al101uk] 30/10/2022 15:01

Quick question just to see if this conversation is as pointless as it seems to be:

Does anyone actually think the M&G buyback was a good idea?

[al101uk] 30/10/2022 14:50

"I've been an investor a long time. I've personally found DIVIDENDS come from companies running out of ideas of how to invest to get the share price up so they just pay money directly, allowing competition with better investment ideas to edge ahead."

Funny what changing a couple of words can do ;-)

I think it's important to recognise what kind of investment you are making. Doing a share buyback as a growth company is a stupid idea as it does indicate that the company has no better use for it's money. But then it could be argued that paying a dividend is the same tacit admission.

If your investing for income then you've already admitted that you're not prioritising growth, so as an argument against buybacks the above doesn't really stack up. If you're investing for growth you don't buy a company with a 10% dividend yield.

[scruff1] 30/10/2022 13:26

BP done a buy back. Think you will find they have made a few bob this year. Lloy also. Sp may not be flying at mo but again think they will have made a few bob and you cant accuse either of running out of ideas
Be nice if mng needed to be threatened with a windfall tax . Just mo of course

[spud] 30/10/2022 13:24

Always makes me smile seeing the pro BB advocates wheeling out old musty WB to support their misguided agenda. Been used more times than a Manchester brolly in November. spud

[adejuk] 30/10/2022 12:51

unless - sometimes - he controls it bec he has so much money

[adejuk] 30/10/2022 12:50

apols. it's too complicated.
i just don't understand.
buy a share you think is good and hold on
nobody can predict a market - even WB
he said it!

[kenmitch] 30/10/2022 11:53

Bear in mind that buybacks are very useful for big investors looking to sell as they have a willing buyer; the Company itself that is buying back. Hence the argument that buybacks reward sellers rather than investors actually holding the share.

[riskvsreward] 30/10/2022 11:28

If the correlation and your conviction is that high, then isn’t it too easy to make money by running a theme fund to short those companies that are doing buybacks. I think one should not paint all buybacks with one brush. There are bad ones as well as good ones, just like all investments, bad ones and good ones. In Buffett’s theory, if market mispriced shares too cheaply, buyback is surely a good thing and that is also any investment is about.

[aleman] 30/10/2022 10:51

I've been an investor a long time. I've personally found buy-backs come from companies running out of ideas of how to invest to get the share price up so they just buy them directly, allowing competition with better investment ideas to edge ahead.



UK-listed companies are doing about £50bn of buybacks this year. And the market is up how much? If balance sheets remained strong and dividends increased, that would be fine, but the same happened in 2008 and that did not go so well.

[greygeorge] 29/10/2022 18:52

jubberjim. It's complicated. This just relates to S.A. so probably lots of this going on in various regions. I don't really have time - nor do I care - what they're doing. Not my job. Go figure it our for yourself.

hxxps://www.moonstone.co.za/why-prudential-is-rebranding-as-mg-investments/

[willywonka12] 29/10/2022 12:50

Was the shares issued at 230p.and they buy back at lot less

[fenners66] 29/10/2022 09:53

Warren Buffett and Berkshire Hathaway (BH) do buyback their own shares. He is a skilled investor and believes he does know the value of his own company - whilst ensuring that his shareholding gains % as a share of the co.

However look more closely at what he invests in.

Mostly BH takes very large slices or whole companies - once they are subsidiaries he pays BH dividends and fees.
Buybacks are meaningless.

Moreover those companies he invests mere stakes in are rarely those that do buybacks.
I think he does not trust others to assess their value. A case of do as I say not as I do.

One area where he did buy in recent years , that did buybacks was the USA airlines industry.
An industry that bought back $100bn + of its own shares.

Then having borrowed to the hilt to do so - went cap in hand to the US govt for - you guessed it - $100bn+ so they could survive.

BH sold out of those companies and lost $7bn + (if memory serves)

I think you will find BH go back to buying companies not shares of those who do buybacks.....

[jubberjim] 29/10/2022 08:32

I am not a fan of buybacks myself

I have a question

Does anyone know if sice the demerger of Prudential(Pru) and Mng back in the day if they retain to this day a crossholding in each other.

I ask because from what I can see Prudential is coming under pressure in the far East and I am wondering if that might be overhanging the share price in light of the splendid dividend it(MNG) in s paying thus stymying any pronounced move up.

Any thoughts

Are my fears groundless

Thanks