re: Ann: Daily share buy-back notice - Append... Thank you for...

re: Ann: Daily share buy-back notice - Append... Thank you for the recent posts. I might share my simple story with this share.

I started buying in April 2011 at approximately 31 cents. The share price drifted south and I made the terrible mistake of not buying anymore. If I was prepared to buy at 31 cents, I should have been prepared to buy at 24 cents. Nothing fundamentally had changed, the share was just unloved. A lost opportunity. However, with a current share price of 38 cents a share and three dividends, I am happy with my initial investment. The love has returned somewhat.

I have been in the market for approximately 15 years, I have seen plenty of small caps announce on market buys backs. It’s an old trick to get a floor in the price. I have never however seen a company basically reach its quota and then start a new buy back. They certainly have a supply of cash to do that.

I know personally, that sometimes the best investment you can make is in yourself. I do not begrudge the directors buying back script provided they are not paying a premium. I would rather see them do a buy back than giving themselves bonuses and pay rises.

The buy back has lifted the share price and basically put an artificial floor in place which will assist the share price for another 12 months. That does not create opportunities for mugs like me to buy cheap. I do agree that paying higher dividends will lift the share price. I do however like the fact that they do not appear to be solely share price driven considering there are options out there at 50 cents a share and the company does not fully own the business and may be issuing further script in the future (see new issue release on 27 April 2012 for 1,641,486 shares).

I have invested previously in companies that are purely share price driven, my involvement normally end in tears.

I was scratching my bald head on Friday when I spotted the Westpac release to the market. My initial reaction was negative. Didn’t I read on page 11 of the annual report ‘we are currently exploring opportunities, which should they come to fruition, will allow us to grow our loan pool’. So I take it one month later that the opportunities are no longer there.

You might recall that FSA just don’t lend for home loans. They do factoring finance for businesses and grew their loan book by over 100% from $12M to $25M. In the annual report it states that on 13 August 2012, Westpac approved a temporary increase in the limited-recourse factoring finance funding facility limit from $25 million to $28 million for a period of 90 days. It seems logical to me that by reducing the home loan facility by $20M, they will hopefully be announcing a permanent increase in the Westpac facility for business lending. I would not be surprised if it is increased by 20M. Just my thoughts.

For those that have been beaten up by FSA, my advice is to hang in there for another 12 months if you can and keep an eye on the quarterly bankruptcy statistics. If they keep rising, I am going to keep buying. ciao