Share buyback is a chance for firms to limit the damage

Eighty-two companies have decided or are currently in the process of buying back 5 to 10 percent of their own equity under a legal provision on financial trading. Companies usually adopt this tactic to stop their shares sliding on the market or when they feel that the market valuation does not correspond to the equity’s true value or the firm’s prospects. With stock markets around the world hit by the fallout from the terrorist attacks on the USA, now is a golden opportunity for companies to acquire their own shares at low prices. But it is a question whether companies will seize this chance, or have the funds to do so, or whether they will suddenly find their competitors possessing a significant chunk of their stock. As for the thousands of small investors who have seen their holdings constantly decline over the last two years, in the majority of the cases their portfolio is worth less than the accounting value of the shares. How much more will they lose given the signs of a global recession? To date, nearly a quarter of listed companies are expected to proceed with share buybacks as part of a strategy to boost investor confidence and also to reverse their dismal stock valuations. Among those companies which have already completed share buybacks are Egnatia Bank, which bought own equity at a maximum price of 20,000 drachmas up to March 24, and Computer Logic, which set a maximum price of 10,000 drachmas to May 28. Construction company Hellenic Technodomiki also set the same price, with the share buyback to last until August 28. The same applied to agricultural firm Spyros, which bought own shares back until April 26. Other companies currently purchasing own shares include Eurobank, which is willing to pay up to 12,000 drachmas for own stock until November 30. Pantechniki wants to buy 2.4 million shares at a maximum 3,400 drachmas until November 30. Other firms are Aspis Pronia, Tegopoulos, Lambrakis Press, publishing company Pegasos, the medical clinic Iason, Duty-Free Shops, Fourlis Holdings, Vernicos Yachts and Infoquest. Karoussos pointed to the attractive valuations available to investors with a strong stomach. Now is a good time to buy, he said, singling out telecoms stocks.

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