Sell or hold for a better price, page-13

for a start it explains the spike today and I would expect it to drop back a little - there is usually a burst of enthusiasm after a buy back announcement. What it means is that the board feels the share price does not reflect intrinsic value, so by using shareholder funds to buy back the companies shares they will benefit the shareholders.

Often they do it with spare cash but in this case they are using borrowed funds to do it.

The general idea is that they buy shares and then cancell them. If the amount of profit they are making doesn’t change, but there are fewer shares, then earnings per share goes up and maybe even the dividend can go up. If earning per share goes up then price will go up.

That’s the theory anyway - Sometimes this works, sometimes it doesn’t..... Just generally a guaranteed buyer in the market helps to keep the share price up.