ALL is facing many headwinds (I listed them in a recent post)...

ALL is facing many headwinds (I listed them in a recent post) so, together with the current economic climate, I expect the share price to remain down for a long time. That doesn't change my sentiment towards ALL, that it's a great long-term investment, but I'm not surprised by the share price slide since Playtech fell through.

I've been thinking about the possibility that the buyback is one of the causes for the ongoing low share price. This is a musing, not a conclusion, and I'm writing it here because I'm interested in what others think of the theory. There are two strings to this theory:

(i) Popular wisdom says that buybacks are returning value to investors. I have never understood that. Although the number of shares on issue is decreasing and one would expect the value of the remaining shares to go up as a result, the fact is that the share price is dictated by what people are prepared to pay for their shares. So, even if the inherent value of the shares goes up because fewer are available, it only takes a bad announcement, a global shock, or any other reason to drive shareholder sentiment down and the share price follows suit.

(ii) ALL is now a major buyer of its own shares. As with any buyer, I would now think ALL wants to pay the lowest price possible. It's not just a legal requirement to buy only within a prescribed price range (a rule that prevents companies artificially driving the price up), it also seems a sensible path to take. If so, it makes sense that the buyback is not going to drive the price up.

They're my thoughts and I'd like to read others.