MEL - Meridian Energy

[Snoopy]

Through the buy-back the market value of CEN decreased from 500 to 450 while the underlying value has increased.

So was the buy-back a success? Hard to say definitively, but it feels pretty poor to me

SP has decreased by approx. 10% and a 13.6cps special dividend was not dished out

xafalcon, all sorts of things have happened during the period of the buyback. After the buyback has run its course, then the value of the share will be 17c higher than it otherwise would have been. The fact that the share price has fallen due to factors unconnected with the buyback is irrelevant to the buyback.

SNOOPY

[xafalcon]

xafalcon, all sorts of things have happened during the period of the buyback. After the buyback has run its course, then the value of the share will be 17c higher than it otherwise would have been. The fact that the share price has fallen due to factors unconnected with the buyback is irrelevant to the buyback.

SNOOPY

We will disagree on this one, but I really do appreciate your perspective

I note that MEL decided on a special dividend which I would be happy with if I still held my MEL shares.......

[blackcap]

And with respect to you Snoopy.

You are mixing underlying value with market value

Underlying value is the theory behind a buy-back being better, and I don't dispute the theory. The maths works out every time

Market value is what someone is prepared to pay for a share at a point in time. It is not a 1:1 relationship with underlying value. The two can be and often are totally disconnected. This is a fact that is demonstrated by the market in every transaction

Now you can always sell your share(s) at market value and spend the money on whatever you want. But you can't always sell your share(s) at their underlying value. This is also a fact that cannot be disputed

Through the buy-back the market value of CEN decreased from 500 to 450 while the underlying value has increased.

So was the buy-back a success? Hard to say definitively, but it feels pretty poor to me

SP has decreased by approx. 10% and a 13.6cps special dividend was not dished out

Market forces have totally swamped the buy-back effect. Same thing happened with MRP.

This is why I would take the special dividend every time. In this example 13.6cps is 13.6cps, it comes in a cheque that can be spent on whatever whenever, and isn't subject to unpredictable market forces

The inconsequential increase in dividends (based on interim & final F15) is 26cps x 3.4% = 0.88cps extra annual dividend. Under $100 on a hypothetical $50k investment held for a year. Peanuts (a pun, just for you Snoopy)

But in your scenario would CEN not have decreased to 450 - the amount of the dividend all other things being equal? I mean a stock going ex div loses that much off its share value/price and then the other market gyrations take force. Much of a muchness I know but a buy back can work well if the cash is used to buy back shares that are "underpriced" by increasing the underlying EPS. I mean a dividend is nice, I like dividends do not get me wrong but I always ask myself... i gave my money to this set of directors/Ceo to do something for me (ie invest in the share(, so why do I want it back again?

[xafalcon]

But in your scenario would CEN not have decreased to 450 - the amount of the dividend all other things being equal? I mean a stock going ex div loses that much off its share value/price and then the other market gyrations take force. Much of a muchness I know but a buy back can work well if the cash is used to buy back shares that are "underpriced" by increasing the underlying EPS. I mean a dividend is nice, I like dividends do not get me wrong but I always ask myself... i gave my money to this set of directors/Ceo to do something for me (ie invest in the share(, so why do I want it back again?

I assume you mean ".....decreased to 486.4 - the amount of the special dividend ....."

Looking at the CEN special dividend last year, the SP rose by an amount similar to the special dividend when it was announced. And then the SP dropped back broadly in line with it's previous level after the dividend was paid.

If a companies directors believe they can get the best results for shareholders using less capital, I support the XS capital being returned the shareholders

"Underpriced" is about as subjective a descriptor as you can use in regards to SP. In almost all trades, one party believes the share is overpriced and so they sell and the other party believes it is underpriced and so they purchase.

Buy-backs generally don't significantly increase EPS, as the above example illustrates (3.4% of 26cps = 0.88cps per annum, or under $100 on a hypothetical $50k investment held for a year)

[sb9]

Pretty strong run from this boring gentailer, looks like to be back in favour with market.

[bull....]

is the best performing stock in this sector , needs to break above 2.40 for more blue sky

target highs 2.70 if 2.35 - 40 holds

[IAK]

target highs 2.70 if 2.35 - 40 holds

Won't belong before MEL overtakes MRP, despite being $1.00 cheaper at IPO.

Disc. Holding both.

[RTM]

Won't belong before MEL overtakes MRP, despite being $1.00 cheaper at IPO.

Disc. Holding both.

So what is the conclusion from this ?
That MRP was first off the block and therefore "fairly" priced for the taxpayer.
And that the pitch was then queered by Labour so that a fair price was not reached and the Government gave them away to get it done ?
Have Labour said what they will do with respect to power, if anything, if they win the election ?

[IAK]

So what is the conclusion from this ?
That MRP was first off the block and therefore "fairly" priced for the taxpayer.
And that the pitch was then queered by Labour so that a fair price was not reached and the Government gave them away to get it done ?
Have Labour said what they will do with respect to power, if anything, if they win the election ?

Yep, the govt got MRP sale about right, but MEl was sold off too cheap because of Labour/greens policy. I read yesterday that the Green's are considering buying the Gentailers back.

[sb9]

Touched $2.50 just now, is that all time high? Certainly remember it being in 240s but not sure if its hit $2.50 though?