Q: DND is potentially buying back 10% of the float - should I be encouraged by this or concerned that it just adds to their already high leverage? Wondering if I should be averaging down here or is it just throwing good money after bad. Thanks
5i Research Answer:
DND is certainly committed to its buybacks: the company bought back $15M in stock in June, at $17 per share. It now has approval to buy back another 2.92M shares. But note in a normal course issuer bid, the company has no obligation to buy shares. It is just there if the company chooses to do so. Considering negative momentum, possible tax-loss selling and the balance sheet, we would not add to a current position.