Taken from Rivkin research dated 1/NOV/21There are no current...

Taken from Rivkin research dated 1/NOV/21
There are no current recommendations for this Event.WBC has announced a $3.5bn off-market buyback this morning and will allow investors a few extra days to buy the stock to be eligible for the buyback. We typically buy into as many of these opportunities as possible, but we wanted to clarify why we will let the WBC one pass. One of the most important characteristics we consider when looking at a buyback is the size of the capital component as a proportion of the total proceeds. WBC will have an $11.34 capital component, meaning the fully franked dividend portion will only be a little more than half of the total cash paid. The high capital component means that the current arbitrage, assuming the WBC share price remained stagnant, is only around 3% which is not enough for us to be comfortable buying. We don’t want to buy WBC hoping to see the price rally, and in the case of recent successful buybacks such as Ampol (ALD), Metcash (MTS), Commonwealth Bank (CBA) and Woolworths (WOW), we had a far higher margin of safety when buying.
Considerations may be different for investors with a low tax rate (such as SMSF pension funds). DYOR..