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ePlus inc. Message Board

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  • palosparkflash palosparkflash Mar 2, 2005 11:25 AM Flag

    ePlus' share repurchasing program...

    You would think that this would be good. But I have my doubts. Past repurchases haven't resulted in any kind of a pop.

    And I wonder if the repurchasing reduces an already low float so that its hard to get enough new investors.

    Does anyone else have thoughts on the effect of repurchasing to an already low float?

    Thanks,
    Flash

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    • IMO, it is reducing the float. "The purchases may be made from time to time in the open market, or in privately negotiated transactions"

    • When ePlus first went public in 1996, outstanding shares were set at 4 million shares. Now we are at about 9M after reaching a high over 10M. Many of the ten acquisitions that ePlus made had a share component as part of the buy price. The secondary offering added a million shares, and these were sold for $28/share.

      http://moneycentral.msn.com/investor/invsub/results/statemnt.asp?Symbol=plus&lst
      Statement=10YearSummary


      So, the big picture is opposite of what we've been seeing for the past couple of years. Norton can't resist a good deal so he is temporarily pulling down shares into the treasury eventhough this tightens up the float (1M or slightly below) and makes it difficult (even impossible) for institutions to establish a position.

      My prediction is this: ePlus will bring net profit margins back up to 3% of gross revenues which is their long term historical average (slightly higher, actually). Three percent of 500M is 15M or $1.68/share in earnings. This will drive the stock higher.

      When the stock is trading on the highish side, Norton will start using shares instead of cash to acquire companies. Problem handled.

 
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