RE:NCIB RenewalRepurchases are terribly misunderstood. The vast majority of investors see them as a brazen attempt by management to juice the share price using the lever of greater demand. This has nothing to do with whether the shares are purchased at bargain prices.
Value investors see things differently. So long as the repurchase share price is lower than intrinsic value per share, repurchases will be accretive to intrinsic value per share. This may not move the share price needle immediately, but if the repurchases are kept up unremittingly, eventually all the weak hands will be gone, and only longrun and I will be left along with the Meltons as shareholders. At this time the combined effects of organic growth and decreasing share count will have driven NAV per unit to a multiple of the current value - perhaps to the $100 range.
But there is another benefit that is rarely discussed. One thing that always concerns me with deep value plays is the possibility of a takeunder, a.k.a. a f**over. I define this as a takeover at less than intrnsic value per share. This tends to happen when the share price has languished for years at far below liquidation value, and most of the float is widely held by disgruntled investors desperate for a way out. The NCIB acts as a pressure relief valve, allowing those most likely to tender to a takeunder to make a quiet exit without ruining the lives of other shareholders. The longer the NCIB persists, the fewer weak hands remain, and a takeunder becomes less and less feasible.
So the way I see it, by both growing intrinsic value per share and ensuring that shareholders get a fair shake, the NCIB punches at twice its weight.