FBU - Fletcher Building

[RTM]

dividends are taxed. If you wanted to increase your shareholding in FBU by using dividends, you would end up with less ownership of the company than you would by way of buyback. Likewise if you didn’t want your ownership stake in the company increased, you can instead sell the equivalent amount of shares in FBU that the buyback eliminates, that way you are effectively getting the same amount of cash you would have gotten from a dividend, but tax free (although with a small commission paid to your broker).

I understand all of that LEK, but thank you for your detailed explanations anyway.. You obviously trust FBU to make sane decisions with respect to the buy back. Thats the bit that irks me. I don't. If the shares were $5.00...well that might make sense. But around $8.. ?

[Rawz]

I understand all of that LEK, but thank you for your detailed explanations anyway.. You obviously trust FBU to make sane decisions with respect to the buy back. Thats the bit that irks me. I don't. If the shares were $5.00...well that might make sense. But around $8.. ?

RTM, if you don't believe it's good buying around $8 per share
OR,
if you don't believe management know $8 is good buying then surely you are ringing your broker as fast as you can to dump your entire position?

Where is your conviction?

[RTM]

RTM, if you don't believe it's good buying around $8 per share
OR,
if you don't believe management know $8 is good buying then surely you are ringing your broker as fast as you can to dump your entire position?

Where is your conviction?

Well...I bought mine at 3.25 not so long ago. Would completely support FBU doing the same.
I'm moving on, but thanks for all the advice.

[winner69]

Last years buyback they purchased 29m shares for $147m (average about $5.14) ...and 'destroyed' the lot

That was about 3.4% of their shares

Helped TSR and TSR features a lot share based incentive scheme and other remuneration

[winner69]

Share price up about 9% since the last profit upgrade and that Investor Day

NZX50 only up 1%

Obviously liked by the big end of town

[LaserEyeKiwi]

Quite simplified and incomplete view of the tax rules.

Yes, Dividends are taxable, but so are capital gains if IRD deems you a trader. No difference in this case (if you need or want to sell your shares).

Dividends come with imputation credits (helping you to save taxes) which you would not get in case of a buy back.

At the end - sometimes buy backs are more tax efficient for some individual investors, sometimes they are not. I however do not see it as desirable if boards favor with their buy back decision some of their investors over others.

It's true the imputation system here in NZ makes it a bit blurrier (as do the investing vs trading rules). much more clear cut in US market.

[LaserEyeKiwi]

Well...I bought mine at 3.25 not so long ago. Would completely support FBU doing the same.
I'm moving on, but thanks for all the advice.

well done on your entry price! cant blame you for lightening up or exiting position.

[LaserEyeKiwi]

Share price up about 9% since the last profit upgrade and that Investor Day

NZX50 only up 1%

Obviously liked by the big end of town

Odd of MSCI world index inclusion might be playing a part with ATM collapse?

[Scrunch]

It's generally more tax efficient. It's also great for management if their performance bonuses have links to shareprice targets.

And it reduces (but doesn't eliminate) the chances of FBU making a value destroying acquisition. They have had a few of these so a lower chance of another is a good thing.

[Balance]

And it reduces (but doesn't eliminate) the chances of FBU making a value destroying acquisition. They have had a few of these so a lower chance of another is a good thing.

Excellent point!

This has been the greatest wealth destroyer by FBU's egoistic and over-glorified CEOs & management from the last CEO to way way back to Hugh Fletcher's time.

But be thankful as it has meant opportunities to pick up FBU shares really really cheap!

FBU just have to stick to its NZ operations and milk the oligopolistic businesses that it is in and the sp will surely rise well above previous highs.