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Xinyuan Real Estate Co., Ltd. Message Board

  • lizhang200 lizhang200 Jul 30, 2012 6:45 AM Flag

    $20,000,000 Stock Repurchase

    I've seen it rumored on this board and elsewhere that XIN hasn't begun its $20 million buyback because doing so now would be taking advantage of the inside knowledge that it will beat analysts' expectations for the next financial report. Is this pure speculation aimed at explaining the recent low volume and (before a couple of days ago) declining prices, or are there actually some empirical facts to support this claim? I hope this claim is true. A hike in the stock price due to the August 1st ex-dividend date (08/03 record date) and upcoming financial report is not unlikely. Were that to be followed by a spike in buying due to the commencement of XIN's buyback plan, it wouldn't surprise me to see XIN move toward its 52-week high within the next month or two. So far, however, other than the obvious low volume as of late, I haven't been able to find any direct evidence that XIN is delaying its $20 million buyback plan until after the quarterly financial report comes out.

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    • Shelly, my point is that I think it does make a difference. When they made the dividend announcement, they already knew what would be announced for earnings. Why would they not wait and make the dividend announcement at the time of earnings? Maybe looking for a double pop from good news? (Possibly). Maybe hoping there is an offset of good news and bad news (again possible).

      My point, though, lies in the fact that they have either done themselves an injustice by announcing the dividend prior to good earnings and not beginning the repurchase when the price is still low, or they know the price will drop after earnings and are waiting to scoop up some really cheap shares after a bad announcement.

      You're right...it's not rocket science, but makes one think about the thought (or even lack thereof) put into the dividend announcement.

      It will seem suspect to me if there is a bad earnings announcement, period of repurchase of cheap shares, and then a blowout Q3.

    • If you're talking his first post on that thread, I don't see it as a noodle scratcher. Once they make that announcement, and say earnings is a week later and they weren't as good as expected, it wouldn't matter.

    • On the 'waiting for lower prices' point, check out TT's noodle scratcher, a little higher up this thread: http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_X/threadview?m=tm&bn=72398&tid=22190&mid=22298&tof=8&rt=2&frt=2&off=1

    • There is nothing that states what dates they
      actually have to start buying or that they even
      have to spend the 20m. They can buy up to 20M.
      They might buy any portion of that amount. They
      are only restricted to how many based on volume
      and not the first half hour, or the last half
      hour. Maybe you (plural) think they should be
      buying right now, but maybe they are waiting for lower prices than they are right now. If they haven't bought any maybe that should tell
      you they expect it to go lower.

    • That's definitely a winner for today's Cool Thought of the Day Award.

      I think that'll be one of those things I think about in that little space of time between when I lay down at night and when I actually go to sleep.

    • And that is exactly what I was thinking...how do you prove guilt by non-action? (Not trying to imply there is any guilt associated in this case at all...merely pointing out the paradox of the situation).

      We just will have to wait and see which it is....

    • Thank you... :D

      Sometimes being a backwards thinker can actually help...

    • Good post, Star. That was a handy list, and scanning it I learned there IS one blackout period under 10b-18: the first 4 weeks after a stock IPO's, so, my mistake, there.

    • Thanks, Star. I'm pretty sure Rule 10b-18 is only one of several safe harbors XIN can use to Repurchase (technically, it doesn't even need a safe harbor, but that type of Repurchase carries higher risk). Also, while 10b-18 does set some timing restrictions (for example, no Repurchasing in the last 20 min or half hour of the day), I don't think it sets any actual blackout dates.

    • Nobody knows for sure whether the $20 million Repurchase is suspended pending public notification of 2Q's results, but I will say this: without a pre-planned program of Repurchase (and XIN has none), the legal department will definitely be recommending that management wait.

      I'd also say that it's my own opinion -- but just purely an opinion, here -- that the volume numbers support the theory that the program's currently suspended.

      • 1 Reply to hmmm26
      • Just because they haven't bought any stock, doesn't mean their not going to.

        Effective immediately does not mean buy immediately. From looking at the decline in the stock price, they've been wise to wait.

        I'm curious to see what the activity on the stock price will be after the earnings report. By September we should have a clear picture of whether they're buying or have really suspended the purchase program.

        If they do suspend the program, they would mention it in either the 2nd or 3rd quarter earnings report.

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