joewolf, I agree with you, however my view is; 1. The cash can...

joewolf,

I agree with you, however my view is;

1. The cash can be invested and yield a better return. I'm sure the major shareholder would not be happy if it didn't and she would make changes to turn that around. She has a vested interest in CMI performing and a nice increasing dividend stream would be ideal for her.

2. The offer price for the buy back is low, however the alternative is to sell on market and my guess would be you would get less. I am a long suffering shareholder that has been through the machinations of CMI over the last 10 odd years. I will hold

3. With the buyback it does allow smaller holder an exit at no cost and will deliver EPS improvement if successful. If the buyback occurs and CMI deliver the same result as last year then the final dividend will probably get raised to $0.04

4. The business has over $27m in cash, $4m will be used for the buyback leaving at least $3m in cash and a further $9m in debt funding to develop the electrical business which would be more than adequate. Having said that I believe that the electrical business has huge organic growth potential alone which wouldn't require a large amount of cash to fund.

5. I don't like the increase in holding by the major shareholder, but my true belief is that with a large blocking stake by Schroders this will keep her honest and any moves she makes will only add to the value of CMI ie utilising cash more effectively and the buy back.

6. I also don't like the fact that the board keeps stating that they are discussing future involvement by the leaving GM of the electrical business, what for? If the new GM is any good there is no need for him to be their unless they have a plan to increase the size of the electrical business through acquisition that would require someone at his level to manage or integrate. I would just like clarity on why?

My belief is that if the buyback is successful and the full year dividend raised to at least $0.04 we will see a small re-rating of CMI to around $1.30/share. Then it will be up to the new CMI manager and Glennon to deliver over the coming 6 to 12 months to get another uplift.