WHITEHAVEN COAL LIMITED (ASX:WHC) - Ann: Update - Notification of buy-back - WHC, 68024017, page-13 - HotCopper | ASX Share Prices, Stock Market & Share Trading Forum

Originally posted by darp: ↑

There are typos in the above, but Hotcopper gives you just 3 mins to correct and then you cannot delete and replace?? Here it is corrected:

Hi, I am American and just wrote up stock buybacks in regard to a Canada gold stock Investment company (EarthLabs SPOT) and Canada oil stocks in general. It totally applies to Whitehaven and the discussion here on buybacks. Whitehaven is one of the most extreme examples of how a company can force the value and the stock price way up, literally to over $1 billion a share if the market does not respond to the buybacks in the short-term. Seriously, it is simple math.

The best parallel to Whitehaven is Canada oil stocks that have massive free cash flow, as does Whitehaven have on ASX.

Here it is: This is a very good video with Eric Nuttal on oil sector. Worth it from beginning, but I have it starting where he explains buybacks and how that will drive oil stocks to $1 billion per share in 3-5 years. https://youtu.be/fv35J8Qr7AE?t=442+That is because in 3-5 years they can buy all their stock back for free cash flow. And then the last share is worth the entire value of the company, and the shareholder does not have to spend a penny for this to happen. Probably over 90% of investors and maybe 30%? of public company CEOs do not understand why buybacks work wonders if the company can do them with free cash flow and the stocks are say 4PE or lower.

If you spend 5 mins watching this with an open mind, anyone can understand buybacks. Most people that think they understand them, do not. If you think a $20 stock can become a $200, $1 million or $1 billion dollar stock due to buybacks then you understand them. If not, you do not understand buybacks. It is simple math as Eric Nuttal points out in 5 mins.

So will all oil stocks go to $1 billion a share? No. Why? The market figures out it is headed to $1 billion a share so then rerates the stock way higher. Because of that the company can not buy back all of their stock in 3-5 years. If the stock goes up 10 times after 33% of stock is bot, then it will take 20 years to buy the rest of the stock, BUT you just got a Disallowed on 1 year!

Did that happen last year? No, companies were able to buyback huge amount of stock in sector and in last 12 months stocks are not up, which is the best outcome. If it was on a 3-year to 100% buyback rate, then each share they buy now is inherently worth 50% more than it was (it has 50% more FCF and earnings per share with just steady state operations) and they can buyback stock 50% faster and cheaper than it could last year. So you want the price to stay down during buybacks as math wise it is far superior returns in another year or two.

In this case if stock started at $20 a share, $1 billion FCF and mkt cap of $3 billion = 150 million shares you know that you get $1 billion a share in 2 years if stock does not go up before then. If it rerates to 9x FCF after 1 year, it was 3x FCF, 33% of stock removed = 100,000,000 shares and $9 billion market cap = $90 a share or a a 4.5 bagger in one year.

Reality on May 2023 is the best, big buybacks and price has stayed about the same in last 12 months. Debt is way down, so they have more money for buybacks and stocks are not up 4.5 bags. So lets go 1 more year at current prices. $1 billion FCF is spent buying back stock. That is 50% of stock left so now just 50,000,000 shares left. Then it goes to 9 FCF (still cheaper than avg stock out there) so $9 billion mkt cap / 50,000,000 shares left = $180 a share, so a 9 Bagger. Pretty good, I will take a 9 bagger in 2 years as often as possible.

Lets go 1 more year. Lets say the market was as stupid as it was in 6-2022 to 6-2023 and price stays the same. That means the remaining 50,000,000 shares is bot back, except just 1 share. Then it goes to 9 X FCF = $9 billion mkt cap and 1 share = $9 Billion a share. A 450 million Bagger. Lets go more conservative and say at 10,000,000 shares left the market becomes rational. Then $9 Billion value / 10,000,000 shares = $900 a share or a 45 bagger. On a few Canada oil stocks they have pledged to use 100% of FCF to buyback stock until the mkt fairly values the stock.

It will get very interesting in 2024. Again, the only company I know that can force the rerating, outside of Canada, as fast as those stocks is Whitehaven. So the longer the market is stupid the better. The market was wonderfully stupid on oil buybacks and Whitehaven in the last 12 months.

OK again few companies present that type of opportunity, maybe 5-10 Canada oil stocks and Whitehaven in Australia. Anyone here know of any similar buybacks going on, on the ASX?

Cheers

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Great video @darp,. looking forward to the response from those who said buybacks are a waste of shareholders money
cheers

(20min delay)
Last $7.16		Change 0.020(0.28%)		Mkt cap ! $5.990B

Open	High	Low	Value	Volume
$7.10	$7.16	$6.84	$72.74M	10.29M

No.	Vol.	Price($)
1	50	7.100
2	6000	7.070
3	8726	7.000
1	7960	6.980
2	4000	6.950

Price($)	Vol.	No.
7.170	650	1
7.180	200	1
7.190	3002	1
7.200	1559	2
7.240	2000	1

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