CDW Holdings (BXE.SI) : Another big round of share buy backs.
Massive share buy back exercise ongoing after Q3 results. so far hit 1.33m+ shares liao. Ongoing in a big way today as well. It is still trading around 97% net cash value @ 0.255 price, though price has gone up roughly 10% from 22c levels a couple weeks ago.
I vaguely remembered that they did do some big buybacks in 2012. So went back and had another look. Indeed they purchased 19,229,000 out of the authorized 47,748,000 shares from Oct 2012 right till the beginning of Jan 2013. This was later given out mostly as employee stock options to management. Some getting as much as 2m+ shares. The share price was pushed up 50% during this exercise. Treasury shares got boosted to 44,632,000
This time round, the authorized number is 23,745,700(which is about the same as last time, factoring the 2:1 share consolidation. So far as of closing last friday, company has bought back 1,332,300 only. Treasury shares stand at 15,552,302. It is very likely CDW will buy back another 7-8million shares to top up the treasury.
I was waiting for the usual insider buys to go with the share buybacks but looking at 2012's buybacks exercise, it seems management will not be doing any buying, unlike what Avi-tech's boss did.
In 2012, CDW recorded a jump in revenue and profits in their 4Q report right after their massive buy back exercise. In this 3rd quarterly report management has hinted they were in testing phase for volume production of their new product with a new client. They have also cleared out a factory in China for future OEM production. It seems with this buy back exercise, this testing may have been successful and company could be announcing a big deal in next year's 4Q, commencing mass production at the cleared up factory. Of course this is speculation at this point.
In any case, being at net cash value, I have finally decided to start accumulating despite a slightly improving market from oil price recovery, as I feel should 4Q result be bad, downside is limited whilst upside could be substantial if history repeats.
[author has shares in CDW Holdings.]
Hi Bluekelah
ReplyDeleteYew Kim again, I was about to bring to your attention, thinking that you may miss this. Glad u know. I accumulate some too. Wish you all the best, you wish for yourself. Thanks for the above sharing about CDW. God blessed you.
victor(yew kim)
No problem, I am happy to blog about my favourite counters.
Deleteand thanks for hanging around victor, u must have made some $$ from oil price going up post OPEC announcement? ;D
I reckon if they don't get the new contracts in, their current business should still help them breakeven in terms of costs.
I am betting something must have happened in the company to trigger them to start doing share buy backs. Let's see what happens in the coming month. With much less available shares post consolidation, I think the share price could jump up to NAV ~38c very soon if they buy just a couple more million shares.