RE:RE:RE:RE:RE:RE:RE:NCIB RENEWED!!
navajojoe wrote: Don't get me wrong, I don't like NCIBs or SIBs either. But i equally dislike paying dividends until all other avenues of value creation are exhausted. As long as there is debt to be paid, or accretive capex to be spent, the money should stay with the company. Only when it is time to "milk the cow" should a dividend be instated. In the last year we have seen too many start dividends without the fundamentals to support one. Many may have to start cutting them, which exposes the stupidity.
ITE cut theirs this week...
I'm not fully informed about GXE, but I believe thiers is at risk if we go too long in this environment...
I think PNE might have issues...
Those are pretty small names tho, I don't really know any bigger ones that may struggle yet...
There are several non payers that have indicated they may start being dividend names (or returning to dividend status) but most those plans are likely shelved at the moment...
On the NCIB:
I hate it with a passion. Like someone mentioned here (and many have said when we get into this discussion), it's extreamly rarely used effectively and it just feels like it pads the maths in favour of the Management for them to get their bonuses. When the shareholders benefit it's rather minor.
I always feel that the buybacks benefit the traders or people looking to exit rather than the long term holders. Those game players and weaker hands get thier fills in because of the buybacks.
NCIB money is just money thrown away as most likely the person receiving that money likely does not sell out with the intention to invest back into the company at the same price they recieved the order full to get out. Atleast with dividends you know a good chunk of holders are in a DRIP program with either the company or their investment broker, and those that don't DRIP likely still have favourable company views and are more likely to use issued dividends to increase their positions at some point.
There are many companies that buy back shares at what they call 'below value' but no company is going to admit they bought back expensive shares. Also, there are others that have company DRIPs, also turn around and use the dividend payouts to issue discounted to market shares even tho they are using the NCIB at the same time, effectively they are buying and issuing discounted shares at the same time.
I feel the NCIB use needs more influence from the shareholders more than management, they should present us terms in which they will use it, and we vote to accept them or back to the drawing board to give us a better situation in which we will approve the use of the NCIB.
Maths usually work out to continue to support NCIB use, but they don't really pass the 'eye test' for shareholder value increases most of the time it seems.