Electronic Data Processing is a company I bought recently. I’ve since found out that they bought back half the shares for 6 million pounds just after the most recent financial report. The web sites that I use to filter stocks have the new number of shares (12.5 million, down from about 25 million) but have the cash balance as at the last statement, £8 million, rather than the actual amount post-buyback of around £2 million. So the NTAV isn’t 13.5 million, it’s 7.5 million, so the market cap of 5.8 million isn’t below half NTAV, it’s about 80%… there’s a lesson in there. READ the last few reports rather than just the latest one!
The same kind of thing happened recently with Abbeycrest, where they issued 40 million shares at 5p each for £2 million. But the shares have a market price of 9.5p so that blows the price to tangible book ratio up to over 1 since 40 million shares are now priced at twice the equity they raised! I’m not sure what to do about this. My theory is that I’d sell since I can get more selling the shares than I could by selling the company assets. But I might wait until the next financial report to see how this all shakes out. I may do something similar with EDP mentioned above.