tag:blogger.com,1999:blog-7294165939647321702.post9025388399639013493..comments2024-03-28T13:45:43.362-04:00Comments on <center><a href="http://www.barelkarsan.com">Barel Karsan - Value Investing</a></center>: Value BuybacksSaj Karsanhttp://www.blogger.com/profile/04493152766022812984noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-7294165939647321702.post-58817564001284821612010-06-07T14:58:27.607-04:002010-06-07T14:58:27.607-04:00Hi Andrew,
Of course, that is a possibility. But ...Hi Andrew,<br /><br />Of course, that is a possibility. But I don't think it's very probable, as the CEO owns a large chunk of shares and that action would reduce his wealth (private companies trade at lower multiples to public ones). I think he's trying to do the opposite with this buyback: raise the P/E.Saj Karsanhttps://www.blogger.com/profile/04493152766022812984noreply@blogger.comtag:blogger.com,1999:blog-7294165939647321702.post-67447455443016990082010-06-04T13:54:21.812-04:002010-06-04T13:54:21.812-04:00Saj,
would you have any concern that the company ...Saj,<br /><br />would you have any concern that the company is trying to go dark and delist? I was unable to find the number of shareholders listed in their 10K or Q (which obviously would have changed by now).<br /><br />AndrewAndrewhttps://www.blogger.com/profile/14419480516695273356noreply@blogger.comtag:blogger.com,1999:blog-7294165939647321702.post-52623786762787780492010-06-03T02:49:05.800-04:002010-06-03T02:49:05.800-04:00Hi Amit,
I agree they don't have to buy anyth...Hi Amit,<br /><br />I agree they don't have to buy anything, but three months gives them a shorter time frame to work with. I.e. There will be questions about why no shares were purchased in just three months, as opposed to in four quarters.<br /><br />I understand what you're saying - that the announcement appears to sabotage the company's buying plans, but I know that in Canada companies have to make their buyback intentions fairly clear, so that might apply here as well.Saj Karsanhttps://www.blogger.com/profile/04493152766022812984noreply@blogger.comtag:blogger.com,1999:blog-7294165939647321702.post-69662344285037157282010-06-03T00:26:20.570-04:002010-06-03T00:26:20.570-04:00This is a great find. There has got to be a catch...This is a great find. There has got to be a catch, Saj - but good work nevertheless finding this gem.<br /><br />How do you claim that the 3 month window versus the 12 month window somehow alleviates any 'talk up the stock' concerns. They are not mandated to buy a single share back under any kind of law. They in fact expressly reserve the right to redact arbitrarily for any cause. <br /><br />This could easily be a short-term stock-pump press release. Here's my dilemma about all this: why in the WORLD would a company offer a press release DECLARING that they are about to buy back 17.6% of the company's market outstanding shares below a certain threshold that is less than the company's current stock price? Why announce this kind of strategy, when such an announcement would sabotage the company's own interests to buy the shares cheap?<br /><br />One trigger for a company to buy its own stock back is if its own stock is cheap. At this point, the company's own stock is equivalent to any other common stock out there in the world. If the company decided, instead of buying back its own stock, to buy back some other net-net because it feels it is undervalued - and a good investment of company cash - would it announce to the world that it is about to buy that net-net?<br /><br />I think not. This smells funny, what do you think?Amitnoreply@blogger.com