Q: Hi,
Can you comment on the share buy back? Generally, what is the reasoning for buying back and canceling shares?
Thanks
Paul
Can you comment on the share buy back? Generally, what is the reasoning for buying back and canceling shares?
Thanks
Paul
5i Research Answer:
Companies buy back shares if they believe they are undervalued and the company has the financial capacity to do so. Management weighs the attractiveness of its own shares versus the alternatives of growing the company or making other acquisitions. GUD shares have been weak for years. It sold shares at $10 in 2016 and shares are now below $5. As shares are cancelled, the percentage owned by management correspondingly increases. GUD's share count has gone from 143M in 2017 to 108M today, with the current buyback up to 10% more of its public float. Still, all the buying has not helped the share price at all, at least so far.