Surely a buyback would be a misguided use of funds. Our company...

Surely a buyback would be a misguided use of funds. Our company is in the development phase and preparing to go mining. Significant funds will be required for this phase in the company transition.

While its true that WM has purchased lots of trucks and bloody big excavators etc, we don't have sufficient funds for everything that will be needed. Funds will need to be either borrowed or raised through the issue of additional equity to get us into production.

Overall CDU is currently in a quite healthy state from what I can see so why compromise that by spending cash reserves purchasing our own stock for the sole purpose of manipulating the stock price in the upwards direction ? Doing so only leaves us in a less healthy financial state and provides an opportunity for big holders to cash in during the artificial high that the buyback creates. Having spent all the cash and facilitated the exit of some big investors we then need to go back to the market and beg for more money.

Buybacks have only two valid uses in my opinion. The primary use is for companies with low debt and large profits to increase their share price by reducing their issued capital. For companies that don't have sufficient franking credits to pay out profits via fully franked dividends, buybacks can be a more tax effective way of passing the profits to shareholders. Shareholders get the tax advantage of reduced rate CGT instead of unfranked dividends.

The secondary and much less common reason is that the share price is significantly and genuinely undervalued on a termorary basis, surplus funds have no better use, and the on market buyback is likely to be significantly share price accreditive long enough to soak up the surplus stock which the overall market has not been able to otherwise absorb.

In my view CDU has spent too much time trying to manage it's share price in the past and not enough time communicating to shareholders. It may have been vanity or fear of takeover or some other reason, I'm not sure. None are good reasons to be overly obsessed with share price. If they communicate the facts in a timely manner the shareholders and potential investors can decide the price. This is what being a public company is all about.

Another buyback would be quite silly in my opinion. The past is the past and the company appears to be moving on from recent panic and confusion. The next 2 years could be huge for CDU. Now is not the time to be doing silly things like buybacks for short term share price vanity. Our company is here time mine.