When the buyback was originally announced on 27th Feb 2020, it was stated that it was intended to operate if the LSF share price was trading at a discount to NTA of 10% or more (with NTA defined as being the lower of pre-tax-NTA and post-tax NTA). Since then, the 10% rule appears to have been scrapped. The annual report published on 18th October 2021 stated that the board was committed to narrowing the gap to less than 10%. No indication of by how much was stated. It seems most unlikely that LSF would use the buyback to convert the discount into a premium, so all that is known is that the new discount target must be somewhere between 0% and 10% of post-tax NTA.
Each can make their own guess at how big the NTA-SP discount will have to be before the buyback kicks into gear. My guess is that the gap might have to be consistently between 3% and 5% of post-tax NTA, in other words at least 10 cents.
In the last few days the post-tax NTA has been higher than $2.96 while the SP has meandered between $2.84 and $2.97. So it is no surprise that the buyback does not appear to have restarted yet.
Meanwhile the SP is being well supported, apparently by investor confidence that the NTA will continue to rise. Markets generally have their ups and downs so, following the buy-low-sell-high mantra, I am out again for a while.
LSF Price at posting:
$2.91 Sentiment: None Disclosure: Not Held
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