Well Fred, my initial reaction was the same as yours, but I guess this does make some sense. Your point about declaring it now must be correct...there must be laws against buying shares and then issuing news to boost the price (although the brokerage industry does this all the time!). If this is true, it probably means that the buyback will begin tomorrow. Think about news boost plus buyback boost on tomorrow! We could see 20 (no kidding!). Well my dad on my advise has 1000 shares at a basis of 16, so that would be pretty nice!
I also don't advocate stocks with dividends. To me, like you have mentioned, the money is almost always better spent in other ways (buyback, in most cases). But CREAF is a unique case. The singapore laws (how do you like that tax exemption one!) make it difficult for share buyback to be carried out to the extent that CREAF wishes to do so (at least this is the message I get). The dividend seems to confirm this theory.
10% buyback at $20 + .50 dividend, only depletes about half of CREAF's cash position (based on my rough calculations). And they're a cash cow, let's face it. Most importantly, I take the announcement to mean hands down their intention to purchase no less than 9.3 million shares before the AGM, and 9.3 after it. And just as importantly, if analysts find this out (which the company should (should being the operative word) confirm), we are off to the races.
"It's a good day to be a CREAFster"
Brian |
