thoughts on financial strategy, page-7

Nice work, dasa, and nicely analysed, Horse.

Dasa, re this:

"The cash reserve is irrelevant for any takeover as its value is always discounted in a takeover when assessing company value."

I am not suggesting there'll be a takeover- wishing it won't make it true. :) However, if it came to say, a 30% premium for all of OZL- including OZL's cash- or the company giving us some money back, PLUS still getting 30% premium on the share price, I'd definitely go for the latter. The money is laying dormant at the moment. A predator/suitor paying takeover cash for OZL cash seems odd.

I know the argument re OZL's cash can be one of two, really:

* Use the cash by giving it back to SH'ers
* Use the cash to create company value- keep it with the company

A dividend (unfranked is ok) or a capital return will probably raise the share price somewhat, because OZL will be seen to be "doing something". We may or may not agree with that, but that's what the discourse dictates- OZL needs to "do something".

Re a share buyback, Horse, it can work... but we will still move about with the vagaries of the market- at the end of the dsay it could cost the company a small fortune, and we could be back to where we started, particuarly if the market is poor, and because we are so aligned with the Dow.

I change my mind a bit re dividends/capital return. I recall saying here in the past that I'd prefer the company SP to just rise, and forget dividends. However, the latter can lead to the former, and if cash was just languishing, and set to go to a suitor, I'd prefer it came to me (and get the takeover premium on top).