GoSeigen wrote:dealtn wrote:GoSeigen wrote:
I don't see that they're different. As a shareholder I want to acquire shares at a low price, and have them bought off me at a high price. Struggling to see what is strange about that.
As a preference shareholder I'd not be so pleased, but they (pref holders) have already made clear they don't want their capital returned so I guess they will need to accept whatever scraps are thrown to them by way of a dividend... and at 6 yield they need 14 years of payments to get their money back.
GS
As a shareholder they are spending my money, so I much prefer them to be buying at a lower price.
As a shareholder I want to be buying low and "having them bought off me at a high price" too. Who is buying them from me, in the secondary market is irrelevant.
??? They're NOT spending your money, they're returning your capital! It's the opposite of spending your money.
Why should the buyer be someone in the secondary market? Why can't it be the issuing company? They're either going to buy your shares off you or give the capital back some other way. Better they buy them at a high price surely? [Quite apart from the fact that you voted and authorised them to buy the shares in the first place!]
GS
We clearly have completely different ideas about what they are doing in that case.
If I don't participate in the buyback as a seller of shares (to them) my participation in the "return of capital" is through their purchase of shares (and cancelling them). Clearly the lower the price they do this the more shares they buy. Consequently my proportion of the remaining ownership increases, and does so by more the lower the share price of that buyback. My preference is for the exercise to take place at the lowest share price possible.
Now do I want, as an owner, the shares to be low or high? High, and at a price I deem no longer worth holding I sell and take my profit. But, as I said, these are different things.
(Imagine the ridiculous scenario where there are 100,000 shares at £20 each and they want to "return" £1mio. Let's assume the market cap of £2mio perfectly matched the assets for simplicity) If they bought 1000 shares at £1,000 and I wasn't one of the lucky sellers, there would be £1mio of assets left and 99,000 shares, and in a perfect market each share is now worth £10.10. Alternatively they used that £1mio to buy back shares at £12.50, there would be 20,000 shares left and assets of a £1mio so my unsold shares are worth £50.
This is a ludicrously exaggerated example, but as a non-seller I would prefer the outcome to be one where my shares were left at £50, not £9.90.)