@speakup Haha, like that I better start my own CEF then. Last week was the verdict of the court case, so did a bit of post mortem, that's all. Good thing it is along the lines I analysed, otherwise would be accused of posting rubbish again.
@observatory Depending on how the bought back shares are kept in the books. If as treasury shares, there is no change in AUM, just a swap of cash for treasury shares. It is only when the shares are cancelled that there is a reduction in AUM.
@Just88 This is how the numbers are derived. If shares are bought back at say $2 when the NAV is say $3.40, when the shares are cancelled, the difference between the cost and NAV ($3.40-$2.00) i.e. $1.40, is then distributed among the remaining shareholders. So maximum allowed buyback of 10% paid up capital =14 million shares, surplus of $1.40 each = 19.6 million, shared by remaining (140-14) 126 million shares = 15.55 sen/share increase in NAV. This has the same effect as buying 28 million worth of shares from the market and selling them for 47.6 million, realising a profit of 19.6 million in the P&L accounts.
In the interest of the long term investors/shareholders, ICAP should do share buyback as it will immediately increase the NAV per share of ICAP. Should the BOD acts in the best interest of its shareholders or the fund manager ?
A share buyback at a discount is effectively a transfer of wealth from the selling shareholders to the remaining shareholders, so this has a psychological impact on those intending to sell, why should they lose out on the price discount by selling? Better let others sell and i reap the benefits by keeping the shares instead. This will slow down the supply of sellers and can help narrow the discount. In US, companies can announce big buybacks, but are under no obligation to buy in full, just for the psychological impact on the share price, because that imply a temporary floor price supporting the share, giving confidence to the buyers to come in, and for sellers to hold back.
WB has told shareholders that Berkshire will consider share buybacks if price drops below 1.2 times its intrinsic value. Given the financial strength of the company and the reputation of WB, this forms an invisible support line to investors confidence.
The strategy of attracting individual investors was copied by Pershing Square Holdings (PSH), the 2nd largest closed-end fund in the world. Despite massively buying back its own shares and making regular dividend payments, PSH encountered the same NAV discount issue as Scottish Mortgage Investment Trust.
"In 2021, we increased our marketing efforts in the UK., specifically to retail investors and the 'platforms' they use, and remain focused on reaching a broader array of potential investors". In Mar 2021, PSH engaged a professional firm to cultivate demand across UK-based wealth managers and retail/adviser platforms, targeting individual investors (Source: 2021 Annual Report of PSH).
And what is icap director trying to say with purchase of 1,000 units from open market?
Director's Particular: Name MR BOH BOON CHIANG Details of Changes: Currency - Date of Change Type Number of Shares Price 20-Feb-2023 Acquired 1,000 2.075 Registered Name Public Nominees (Tempatan) Sdn. Bhd. Nature of Interest Direct Interest Consideration 2,075.62 Nature of Interest Direct Interest Shares Ordinary Shares Reason Acquisition of 1,000 ordinary shares on 20 February 2023 through open market. Consideration - Total no of securities after change Direct (units) 1,000 Direct (%) 0.00 Indirect (units) 0 Indirect (%) 0.00 Total (units) 1,000 Total (%) 0.00 Date of Notice 20-Feb-2023
@thetruthseeker The company can just look up the share register changes every day to track who are the sellers and purchasers for the day directly, Getting the identity of the selling/buying brokers is useful only if you know who are the brokers for certain parties so that you know who are on the board at that moment and plan your orders. Parties who want to hide their identities can simply use a number of brokers and switch them randomly. If you have followed the Singapore penny stocks case, you will know how this is SOP.
Interestingly, one of ICAP's directors is the Chairman of the board of MSWG. I wonder if this director fulfilled his task of safeguarding minority shareholders' interests or just being a yes-man there.
@the truthseeker, this bit about the Chairman of the board of MSWG clears up some questions in my mind. I have had dealings with MSWG in the past, so I better not make public comments. As to the director's recent share purchase, neither here nor there, too small to change him to wearing two hats instead of just one.
When the previous chairman of the BOD resigned, the first announcement to Bursa on the 24/11/20 gave no reasons for doing so. In a subsequent amended announcement on the 1/12/20, for reasons, it was stated as "difference in opinion" However, in the next box, which is for "detailsof any disagreement that has with the BOD, it was filled as "No". Did he resign for something as trivial as not liking the color scheme for the office? No shareholder bothered to find out.
@thetruthseeker, the ex-Chairman resigned before the AGM that adopted the annual report including the reimbursement of the dual listed fund expenses incurred years earlier. BTW, the annual accounts are not subject to shareholders vote, so only need to be passed by the BOD.
Post a Comment
People who like this
You should check in on some of those fields below.
Click Confirm to delete this Forum Thread and all the associated comments.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Posted by Wealthy99 > 2023-02-21 21:35 | Report Abuse
propose 4.00 then let them negotiate to 3.50 then 3.00. Sealed.