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Xinyuan Real Estate Co., Ltd. Message Board

  • catnippss catnippss Oct 25, 2012 7:19 AM Flag

    Need Help Shutting Up BSer on XIN Stock - If Company buyback shares, where can find proof? Doesn't Sh Outstanding dwindle?

    Need a little help here from our educated investors. Where can I find legal documentation of a share buyback? Since Shares outstanding shrink, we know it is happening, but I wanted to find the legal document to add punch to my argument with a ridiculous short that makes shelly look like JB.....

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    • I don't know if there is a legal document to show the numbers of buybacks, but we can do the math. First, look at the basic weighted average numbers of shares outstanding rather than the diluted numbers of shares outstanding. So, you can at least back out the effect of option value. However, options exercised and shares issued to insiders will increase the basic numbers of shares. Typically, we can use cash flow statement to figure the numbers of new issued shares. Also, cash flow statement can sure the amount spent on share retirement. We can estimate the the average price paid by the company during the period to verify the numbers of share retired.

      Most companies report the amount spent on share buybacks and the average price paid during a given period.

    • Star, I'm guessing the "accrual of employee bonuses" is just a regular expense, probably end-of-year bonuses, so it wouldn't affect the actual share amount outstanding.

      But I think you're exactly right that the other one, the "share based compensation" is where our answer lies. "Share based compensation" is probably just 10-Q speak for employee stock options. Since the weird accounting rule says that those stock options only have to be included if they're in the money, it becomes a question of whether XIN's price closes above or below the options' exercise price.

      To use an example, let's say stock options are issued at the end of a quarter. If those stock options are given an exercise price of that day's close -- let's say $3 -- then the question of whether those stock options will be added into the number of "fully diluted shares outstanding" at the end of the next quarter comes down to whether or not XIN's price is greater than $3.

      If XIN closes above $3 the last day of the quarter, the stock options are added into the "fully diluted shares" number, but if it closes below $3, they're not.

      What must have happened between 1Q and 2Q this year was that XIN's price rose and crossed the exercise price for stock options equal to about 1.1 million shares. The inclusion of those shares into the "fully diluted shares outstanding" number at the end of 2Q must've been what offset the roughly 0.6 million shares we think were RePurchased during the quarter, and caused the total diluted shares outstanding to increase by 0.5 million.

      What we'd want to learn to be able to make forecasts for how many shares will be included in the fully diluted shares outstanding number in the future is how many shares remain underwater now, and at what prices would they cross over into the money.

    • Cat, Shelly and others would need plastic surgery to look as handsome as myself, and a brain transplant to be as smart, so I wouldn't even worry about them. Lost causes.

      Most balance sheets show outstanding shares. If I go to my Etrade account, and look at the quarterly balance sheets, it shows shares going down quarter over quarter. If these people can't do basic research, they shouldn't be investing.

      Let them be negative, and hopefully short shares of Xinyuan, so that the rest of us can make money. It would be nice if we can get over the share price prior to the dividend. Close $3.48+ today?

      Sentiment: Strong Buy

    • I can think of nothing public other than the Qs and Ks? It is a line disclosure in the statement of shareholder's equity.

      • 1 Reply to caseysxyz
      • That's exactly right, Casey. XIN always publishes a Consolidated Statement of Operations with its 10-Q's. Page 10 of the last one is where you can get these numbers:

        2Q, 2012: 73.5 million
        1Q, 2012: 73.0 million
        2Q, 2011: 76.6 million

        I don't quite get why that number went up between 1Q and 2Q. Unless I'm remembering wrong, XIN spent its last $1.9 million of the first RePurchase then, which seems like it should've decreased those numbers by about the same amount they actually increased.

        Is the offset from vesting stock options, maybe? But aren't stock options, vested or not, always included in "fully diluted" share amounts?. I don't know; that's a weird one.

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