Tuesday Ticker: February 25, 2020

Akzo Nobel invests in Akzo Nobel

From February 10-14, AkzoNobel repurchased 200,826 of its shares at an average price of €87.92 per share, and a total spend of about €17.66 million.

In total, company buybacks have purchased 2,822,898 of the 199,600,331 outstanding common shares at the beginning of 2020 have now been repurchased by Akzo Nobel–or about one-in-seventy.

Shares purchased by companies themselves are, by default, the common property of other shareholders, but, in practice, eliminated from the share pool. Buy-backs are common practice in businesses with significant numbers of tradable stock. In function, they help reduce the number of short-term investors with voting rights, and reward long-term investors by increasing the overall percentage of ownership represented in each share.

The repurchase program was just one stage of a broader strategy announced on October 23, 2019. In total, the company intends to buy back €500 million shares in the first half of 2020. Thus far, it has bought back €250 million.

The buy-up of stock spurred on a brief, sharp rise in value followed by a sharper fall in Akzo Nobel share value.

Trading closed at €87.6 on Wednesday, February 13, before jumping up to €90.14  on Thursday, February 14. By February 20, the stock was trading at €85.5 , a 5 percent drop.

Such drops are common as interest in buying stocks before major repurchases tend to fuel interest in stocks. When the sales window closes, there is an artificial imbalance between the number of interested seller stocks and the number of stocks buyers are interested in. This often causes a brief dip.

Magna’s slow return

Investors in 2020 have not been kind to auto parts behemoth Magna international, but there are signs things are back on the upswing for the Canadian company.

Its stock slid significantly in the first month of the year, going from trading at above $72 at the beginning of the year to just above $67. Since January 31, Magna’s stock has risen from just above $67 to $69.67.

While part of the dip can be blamed on the company’s temporary closure of parts plants in China to prevent the spread of the Coronavirus, some analysts say the lack of investor confidence has more to do with overall weaknesses in the auto sector than the company’s actual potential.

In the past decade, the Aurora, Ontario business has managed to continuously increase its dividends, which has grown its dividend by over 40 percent on average per year over the past decade. In 2010, shares returned 1.7 percent of their value. In 2019, they returned 2.8 percent–a 40 percent increase.

Uber shares riding near break-even point for first-day investors

Ride-sharing giant Uber has seen its stock tick tantalizingly close to an important benchmark this week–40.57, the stock’s initial trading value.

Now trading above the $40 point, the stock has not traded over its initial price since August, five months after its initial public offering. Uber reached its share-value zenith in late June when it traded at around $46.38.

In its first three quarters being traded on the public market, Uber has suffered from a number of major setbacks.

In 2019’s second quarter, the company reported a net loss of about US$5.24 billion. The company’s net loss for the same period in 2018 was significantly smaller at $878 million.

In late November, Uber saw its London operating license revoked for the second time⁠—the first time being back in 2017. Transport for London (TfL) gave the ridesharing giant 21 days to appeal the case, giving the company until Dec. 16 to form an appeal.

Sure enough, Uber filed its appeal on Dec. 13, giving itself as much time as possible to reach a solution with TfL. Uber’s London operations are allowed to continue amid the appeal process.

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