RE:RE:RE:RE:RE:RE:RE:Who would take an offer of $4.00 CDN for a buyout?It doesn't work when you do the arithmetic. If a company wants to limit dividend payout without reducing the dividend, it should stop issuing shares. But cancelling shares drains the balance sheet for a minimal effect on the dividend -- it costs almost 40x (using last close of 2.70) what is saved in reducing the annual dividend payout.
This isn't news to a CFO, so obviously share buybacks aren't done for dividend-motivated reasons. They're usually done to artificially increase EPS, which will raise share price if all else remains the same or improves (such as revenues, earnings, and general market sentiment). This typically benefits senior management if they receive performance bonuses for reaching EPS and/or share price targets. And if they are being issued shares (or rights to future shares) as part of compensation, the buybacks are giving them increased proportional ownership over time; this amounts to a feedback loop under the BoD's control, which I think should be illegal. I don't want management paid by reducing my % of the company; there are other ways using existing shares that don't reduce my ownership.
As a small retail investor, it's better for me if (1) there are no NCIB buybacks and (2) growth in EPS is generated by true growth in E, not artificially by reduction of share count.
I complain about share buybacks a few times each year. I'll shut up now and continue grinding my teeth over it. Next installment will come no earlier than spring :).
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MUGMODs wrote: Yes. Agree completely with what you are saying.
A couple thoughts I'm probably not expressing well (in what I said)...
Sandvine was buying back below 3.30 when they initially started buying back shares ... so I would expect that at the present share price...they would again be buying back aggressively. Doesn't appear to be the case - why not?
If they were buying back aggressively (at this point), they would be getting the future quarterly cost of the dividend (at a dime) to be cheaper than the initial quarterly cost of the dividend (at 7 cents). - purely due to the huge drop in outstanding shares after all the buy-backs.
I was just trying to say that my odds of getting such a dividend increase (to a dime) would increase with every additional buyback - as outstanding shares decrease and total quarterly costs decrease.