Forum Archive Index - June 2002

["Malcolm Cameron" <malharcameron@hotmail.com>]

SNOOPY
Totally agree with sentiments and if investors can not cope with a currency 
RISK (as most assets are overseas this share price is going to be heavily 
effected by rising NZ dollar in short term) they should sell. Not ask 
company to cut it's own throat with an ill conceived share buy back (like 
the rubicon buyback that jerry and a few others pushed on this site)


>From: "tennyson@caverock.net.nz" <tennyson@caverock.net.nz>
>Reply-To: sharechat@sharechat.co.nz
>To: sharechat@sharechat.co.nz
>Subject: [sharechat]  Buybacks (was Re: [gpg])
>Date: Sat, 15 Jun 2002 23:12:48 +0000
>
>Hi Brian,
>
> >
> >
> >Some talk on the other channel that GPG's considering a buy back. If
> >this is the case I'm wondering if this is causing the negative
> >impact on the price and if is so why, (sounds like question time in
> >the Beehive!) I would have thought a buy back indicated a cheap
> >price and nothing else to invest in but long term should benefit the
> >value of the shares.
> >
> >Buffett likes buy backs. Snoopy, any thoughts.
> >
> >
>
>
>A few years ago when Sir Selwyn Cushing was at the helm of BIL, he
>instituted a buy back of shares at 40c, equivalent to 80c on the
>consolidated share price today.   BIL International passed a
>resolution at their last AGM enabling them to issue vast quantities
>of shares to existing staff at far less than 80c.
>
>Then we had the example of Telecom while under American control, who
>in 1997 purchased 32.3 million shares on the New Zealand Stock
>Exchange for an average of $6.55.  Yet during the current year they
>have placed shares in the market (sold them back to the market) at
>only $5.50!
>
>These are the sort of actions that, over the medium term, destroy
>existing shareholder value.   Buybacks are only good if the company
>buying its own shares has enough capital for its future needs.  This
>was clearly not the case with either BIL or TEL.
>
>I don't like the general idea of an investment company buying back
>its own shares.  I'd take it as a signal that they (in this case
>GPG) have looked around the market and can find nothing better to
>invest their money in.  I would say that an investment company buying
>back its own shares is a negative signal given a medium term view
>forwards.   It certainly worked out that way for BIL!    Short term a
>GPG buyback may palacate nervous investors, who don't like seeing
>their share price drop.  A buyback may steady the share price chart.
>  But I think it will be at the expense of future growth, provided the
>managers at GPG haven't lost their midas touch.  And I see no
>evidence that they have.
>
>A GPG buyback may well benefit the value of the shares (in teh short
>tyerm), but will it benefit the value of the business?   I see the
>latter as fundamentally more important.
>
>SNOOPY
>
>disclosure: do not hold GPG
>
>---------------------------------
>Message sent by Snoopy
>e-mail  tennyson@caverock.net.nz
>on Pegasus Mail version 2.55
>----------------------------------
>"Sometimes to see the wood from the trees,
>you have to cut down all the trees."
>
>
>
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