Tuesday, December 11, 2007

I Want My Buyback Back "Washington Mutual Edition"

Today this news is making headlines

Heute kommt diese Schlagzeile über die Ticker

WaMu to Raise $2.5 Billion in Additional Capital, Reduce Dividend, Resize Home Loans Business and Cut Expenses to Fortify Capital Base

Flashback January 2007

On Jan. 3, 2007, the company entered into an accelerated share repurchase agreement with a dealer, buying back $2.7 billion of its common stock ( Stock close to $ 40 now $ 19)
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Blogger jmf said...

AT&T Monster Buyback

At the same time, AT&T announced a new share repurchase authorization for 400 million shares, which replaces the authorization announced in 2006 under which AT&T repurchased more than $13 billion of its shares through Dec. 7, 2007.

Review in 2009.....

5:00 AM  
Anonymous Clyde said...

So the CEO gets paid $19m per year to make those kind of decisions.

Whoa. Every finance nerd & geek knew this was coming.

3:51 PM  
Blogger jmf said...

Moin Clyde,

it´s a mess. At the same time insiders are dumping their shares.

The scary thing is that on most of the calls analysts were forcing management to increase "the gearing" and wanted a "better use of capital" etc.

Needless to say that way too often the rating agencies "approved" these silly transaction by signaling that the debt fueled buyback won´t hurt the rating....

These guys make Meeker, Blodget look great......

Look at this from the master of disaster Countrywide

"Additionally, as previously announced, management is executing a capital optimization plan and the Board of Directors has authorized a share repurchase program of up to $2.5 billion. In connection with this program, the Company intends to repurchase $1 billion to $2 billion of its common stock in the fourth quarter financed through the issuance of high equity-content debt securities."

from May 2007!
Countrywide Financial Corporation Announces Agreement to Sell $2 Billion of Series A Floating Rate Convertible Senior Debentures Due 2037 and $2 Billion of Series B Floating Rate Convertible Senior Debentures Due 2037

Countrywide Financial will use a portion of the net proceeds from this offering to fund repurchases of up to 23 million shares of its common stock simultaneously with this offering and expects to use the remainder for general corporate purposes.

But all of this gives often a very good entry point for short positions when they have wasted all the ability to pump the shares.

9:46 PM  

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