It looks like Walt thinks the stock is a good buy at these levels! This represents about 13% of the entire float... But, it's not a guarantee that all of will be purchased.
Ms. Momoko Beran, chief financial officer of Simulations Plus, said: “The board of directors has authorized a share repurchase program enabling the buyback of up to $2.5 million in shares during a 12-month period beginning Monday, October 27, 2008. Repurchases may be made in the open market, through a broker, or through privately negotiated transactions, subject to market conditions, applicable legal requirements and other factors. Simulations Plus has no obligation to repurchase shares under the repurchase program and the timing, actual number, and price of shares to be purchased will depend on the performance of Simulations Plus' stock price, general market conditions, and various other factors. Such purchases, if any, will be made in accordance with applicable insider trading and other securities laws and regulations within the discretion of management.” http://biz.yahoo.com/bw/081023/20081023005499.html?.v=1
of course private @ a low price would be key for the buyer (insider/CEO/whoever) because i think our shares would virtually stop trading & we would be paid an agreed-upon rate per share... obviously the lower the existing price, the better for the buyer.
it's in anyone's best interest to buy low (i.e. at the current levels) & then sell the company @ a much higher price down the road, thus maintaining control over the proceeds. also, if the company is a cash cow, the owner of the privatized company controls that cash.
that's why on the surface it's suspect that it appears as tho SLP was intentionally taken down in price, even tho it has cash AND the potential to be bought out.
what CEO wants to share the wealth if he / she doesn't have to share the wealth? investors help float the boat while they're needed, then locked out when larger proceeds are achieved.
not making judgment calls about SLP management, just stating what to me seems obvious but hopefully incorrect. several investor friends who looked @ this stock stated the privatization theory just a few days before someone on this board mentioned the same thing!
this is all speculation, but then so is investing. i believe that the laws & regulations are slanted on every level in favor of the big fish, not the little guys. so i prefer doing my homework, thank you very much!
If this buyback was done evenly over the whole 12 months it would require less cash per month than the cash flow they've had over the past year. So the actual impact to cash would be negligible unless they buy a lot of shares in the near term.
This buy back is the big step toward SLP going private.
If the stock had stagnated (as it has) after a big acquisition, then I could agree with the wisdom in a buy back. Given the cash and zero-debt, all a buy back is going to do is give the one person (or a selected few) over 70% ownership in the company. Investors will lose interest in this stock very quickly. After it goes private in approx two years, it will be sold. A lot of money will be made by the CEO.
Dick, great news indeed. I had been hoping for this announcement, but I also want Walt to put his first priority in making strategic acquisitions. However, this buyback is a great announcement in that it will instill some confidence in investors and should provide a nice floor under the stock.