The size of that purchase (175K) suggests it came from Renesola. So good news is that they are back buying again...
Yep, says a lot about what is going on, right?
The silver lining is that;
A) We stopped at 100-day again today
B) The longer they artificially suppress the share price, the better bang for it's buck Renesola get on the share buyback program, resulting in shareholders owning a larger % of the float.
the company now would be the ability to send out all the blood sucking only with post a strong news, a good contract or someone else because the suker are playing on the cutting edge
when exchanges were around equal the net money flow was negative about 26k 30k now that the stock is -3.70 % net money flow is + 46k
So let me get this straight, someone buys over 175K shares between $1.35-$1.37 (2:58pm) & then it proceeds to drop 7c on less than 1/5th of that volume.
Yeah, looks "legit".
Sure, if the only things one considers are the price of the shares. However, management also has to consider the need for capital to grow. It comes down to this: are the shareholders better served by investing capital in growth or buying back shares. Generally, I would say the former is true, but in this case the buyback, especially of the debt, makes some sense.
So, yes, I agree with you, if you don't consider the overall market, the need for capital, the growth plans internally or by acquisition where cash might be needed, any needs for cash for legal defenses or any other unusual event and if you have a reasonable basis for expecting that you won't need to borrow money within a few years or sell stock for any capital raise, sure a buyback at a lower price is attractive.
SOL hasn't been out of the woods so long that this is 100% right. It's a judgment call to which I see the logic. But it's not a certainty every time. That's my point.
By the way, competitors don't care about SOL's stock price. They probably do like that SOL depletes cash buying back it's stock because it makes them more weak financially and therefore less fearsome.
Call writers get a better premium for their calls if there is buying activity in the stock and the price has been gaining.
Lots of things to consider.
The negative side of a buyback is that it uses capital. That is a statement that the company needs the capital less for growth than it wants to buy its own shares. This is sometimes the case with a very mature company that has excess cash and considers either an increased or special dividend or buying back shares. If the shares are priced low for whatever reasons (industry out of favor, for example) they might opt to buy back shares. Doing so also reduces the number of shares to which the next dividend is applied.
I did note that in SOL's case, an exception is plausible due to the low price of the shares, which tips the scales to rationalizing a limited buyback for what should be a growth company, that would normally need capital.
Let's put it this way; Renesola issued 20M new shares in 2013 at $4.50, if they are now buying upwards of $20M at these levels, that's a good trade ;)
You are confused when the stock is trading at less than 1/10th it's sales and under $1? If you are a shareholder, it's good news for you; you will own a larger % of the company.
I fail to see any negative side of a share buyback, excet when it is financed with debt, their has been a flurry of this recently as credit tightening is anticipated.
The only people who would have a problem with this activity from Renesola are individuals who benefit from an eroding share price, whether that be shorts, call writers or competitors.
Perhaps limited input, activist investors generally are looking for ways to return more shareholder value so I could possibly see Shah having a hand in the share buyback program. As far as business direction goes, Xi's the main man.
I would generally agree with your argument. However, I would also, generally, expect the price of a stock to track it's progress, and in this case, the market seems behind. The reality is that a company's stock price does have an impact on its performance and its ability to attract additional capital, and sometimes it even has an impact on sales. So, even though, generally, you are correct, there are always exceptions. I believe this is one of the exceptions.
I am glad the company has retired debt early by buying it back in the market, and I am glad they are making a statement to the market that the price of their stock does not reflect it's performance and prospects.
Add into the consideration the impact of shorting on the company and its stock price, which is not a "natural" phenomenon, and there is further justification for a buyback. That is a topic of its own, but I want to throw it in the hopper as another reason. There is nothing natural or market about the ability to sell something one doesn't own. Most don't appreciate the negative impact this has on a company's value -- especially when the percentage of shorting essentially is unchecked -- except, on occasion by a larger fund or buying by the issuer, as in this case. You note that buybacks make "the stock look inflated," but that doesn't consider that shorting makes a stock look deflated.
Good luck, longs.
On Shah Capital website it is mentioned they are involved in their investments. It would not surprise me if they are helping ReneSola to become profitable and giving them direction. They were on the last conference call as well.
Shah Capital Management added 1.23 million shares to its position in ReneSola Ltd. (ADR) (NYSE:SOL) during the third quarter, which is now comprised of 4.71 million shares valued at $4.58 million as of September 30. The world has been gradually shifting toward renewables in an attempt to reduce carbon emissions, and this solar stock is definitely set to benefit from this development. ReneSola Ltd. (ADR) (NYSE:SOL) has been refocusing its strategy on downstream projects and services over the past year or so, and the company’s management believes that the market undervalues its growth potential, the abilities of its management team, and its financial position. In the meantime, there were only four hedge funds monitored by our team with stakes in the company at the end of the second quarter, compared to three registered in the previous one. However, the value of these stakes decreased to $62.71 million from $139.59 million quarter-over-quarter. Jonathan Barrett and Paul Segal’s Luminus Management acquired a 451,607-share stake in ReneSola Ltd. (ADR) (NYSE:SOL) during the second quarter.
Me too, at this stage...I'm confused by the buy back strategy...I hope it works, but it's not why the stock is rising now...