Cardinal Energy Ltd (Alberta) T.CJ

Michael Blair is a fool and a shorter...

[Kherson]

Those of you on this board who are praising Michael Blair's blog are complete fools! Lets breakdown what actually occurs during buybacks and how it adversley affects shorters.

1) When a company buys back shares, they buy those shares on the open market and the seller has no idea who he has sold those shares to! Generally speaking, anyone could have bought them. The seller receives his cash and the company reduces it's share count.
Ask yourself this, how many investors sell their stock on the open market only because they are aware of a share buyback. Michael actually answers this very question and I quote, "The investors who believe a particular stock is undervalued are offset by other investors who think the shares are overvalued and the equilibrium of those views is the current share price."

2) Those of us who are holding on to our shares believe that future dividends will be increased per share, simply because there are now less shares. In essense, anyone who sold their shares to the company, during this process, is transferring possible future gains (book value and FCF)  to the remaining shareholders. Yet again, Michael does mention this in the article, "Increasing value can only come from a higher present value of future dividends."

3) What Michael has conveniently forgot to mention is that buybacks cause major headaches for shorters. The shares that have been shorted are also now worth more and the shorter has to also cover the higher dividend.

Kherson

[MikeNewTrader11]

I appreciate your point of view but you do not need to preface it with fools. I have been long on Cardinal for several years.  I would suggest you look at insider share count and those that Mr Edwards hold and look at that percentage total.  Every share bought back increases that percentage.  At 51% they give all off us a 20% premium on the current share price, they go private and

[Quintessential1]

I agree that calling people fools for commenting on or passing on information is counter-productive to the purpose of this board.  If you already know it all then why are you here? I happen to like buybacks especially if they can execute at low or undervalued share prices and agree that it can put a floor on the share price while outting a stick in the eye of shorters. I certainly believe

[MikeNewTrader11]

I like your optimism and if the stock price were to double from here, I too would happily walk away with cash in hand. GLTA