Stock buybacks>operating CF

[yan]

Hi guys, wondering how you would interpret the actions of a management that has spent more on stock buybacks than cash generated from operations.

[brattzz]

depends on the company actually, if the company is under-valued, then it's good to buy back as much shares as possible...
that's being smart..

[Temperament]

Agree, but i would prefer the company put the extra money into our pockets, where we can keep it warm. Besides if the company is really under-value, there are a lot of 'Buayas" waiting in the Market to snap. Snap! Snap! Ha! Ha!

[freedom]

nothing wrong if the company has tons of cash on its balance sheet and is undervalued.

operating cash flow is only for a period only, not necessarily must match long term strategy.

[Temperament]

True! True! A bird in our hands is still always worth two in the bush.

[mrEngineer]

We should sometimes evaluate whether the stock buybacks serves the purpose to sustain the market prices and make the management share options more valuable.

[mrEngineer]

We should sometimes evaluate whether the stock buybacks serves the purpose to sustain the market prices and make the management share options more valuable.

[Temperament]

We should sometimes evaluate whether the stock buybacks serves the purpose to sustain the market prices and make the management share options more valuable.

MIIF has been buying back their shares in the market for quite sometime already. Does the Management hold a lot of options yet to be excercised?
Is that why MIIF did not increase latest dividend payout? Or for some other better reasons.
Vested.

[weijian]

MIIF has been buying back their shares in the market for quite sometime already. Does the Management hold a lot of options yet to be excercised?
Is that why MIIF did not increase latest dividend payout? Or for some other better reasons.
Vested.

hi Temperament,
I do not think there was an employee share option scheme for employees of the Manager (MIMAL) to start with. It did started the scrip dividend scheme (allow one to receive shares rather than cash) back in 2007 but in my memory, it was swiftly suspended after the share price crashed and the Manager deemed it to be grossly undervalued.

As to why MIIF did not increase latest dividend payout, here's my 2 cents:

(1) Current assets actually only support ~3.9cts/share/yr (based on historical data). Latest payout of 5.5cts/share/yr therefore is tied to FUTURE growth. The deficit will be made up by the existing cash hoard (~8cts/share) until the assets actually payout 5.5cts/share/yr. I can only fathom that 5.5cts/share/yr is already a high hurdle to achieve. Hence it will be hard to grow (at a sustainable rate) beyond that in the near future.
(2) It can choose to pay out 8cts/share as special dividends. The end result shd be neutral to its mgt fees but then their future ability to increase their AUM (and hence mgt fees) will be impaired once all their cash is exhausted.

[Temperament]

MIIF has been buying back their shares in the market for quite sometime already. Does the Management hold a lot of options yet to be excercised?
Is that why MIIF did not increase latest dividend payout? Or for some other better reasons.
Vested.

hi Temperament,
I do not think there was an employee share option scheme for employees of the Manager (MIMAL) to start with. It did started the scrip dividend scheme (allow one to receive shares rather than cash) back in 2007 but in my memory, it was swiftly suspended after the share price crashed and the Manager deemed it to be grossly undervalued.

As to why MIIF did not increase latest dividend payout, here's my 2 cents:

(1) Current assets actually only support ~3.9cts/share/yr (based on historical data). Latest payout of 5.5cts/share/yr therefore is tied to FUTURE growth. The deficit will be made up by the existing cash hoard (~8cts/share) until the assets actually payout 5.5cts/share/yr. I can only fathom that 5.5cts/share/yr is already a high hurdle to achieve. Hence it will be hard to grow (at a sustainable rate) beyond that in the near future.
(2) It can choose to pay out 8cts/share as special dividends. The end result shd be neutral to its mgt fees but then their future ability to increase their AUM (and hence mgt fees) will be impaired once all their cash is exhausted.

Thanks, for your point of view. Hope it's correct.
But why are they still buying back their shares, look like its difficult for Management to increase their AUM because of high current dividend yield? (i have read somewhere.) So it may be 1 of the reasons Management keeps buying back company's share. But if that's the reason then dividend yield may be even go higher if after buying Management voids the share. (i am not sure Management void the shares or keep them as Treasury shares). i think i will have more worries if Management keep them as Treasury shares.