There appears to be a lack of investor confidence in HM1 at the moment. A currently huge NTA-SP discount is apparently not enough to entice many buyers even though, from comments made by HM1 about its dividend policy and about its available profits and franking credits, it can reasonably be expected that HM1 will pay a healthy annual dividend in a few months time.
A longterm buyback scheme would benefit shareholders in two ways, by underpinning the SP and by generating profits. Profits from an on-market share buyback are instantaneous and are completely risk-free.
HM1's SP hit $2.36 today. Friday's NTA was $2.98. So, the NTA-SP discount was $0.62, which equates to 20.8%.
If the buyback had a cutoff of, say, 5% of the NTA-SP discount then the profit on each share bought back would never be less than 5%. With a cutoff of 5%, it is unlikely that the discount would ever go anywhere near 20% again, or even near 10%.
HM1 Price at posting:
$2.36 Sentiment: Buy Disclosure: Held
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