SPEND­ING THAT DOUGH

Finweek English Edition - - INVESTMENT -

Bri­tish Amer­i­can To­bacco* is back buy­ing its own stock with pretty much daily pur­chases dur­ing March since it stopped last year. The av­er­age quan­tity pur­chased is 160k-250k shares with the odd day be­ing a lit­tle higher, and for a com­pany with over 2bn shares in is­sue, this is very much small change, but it is still im­por­tant. First, it means the com­pany has ex­tra cash that it sim­ply doesn’t know what to do with. It could de­clare it as a div­i­dend, but by re­duc­ing the num­ber of shares in is­sue, each re­main­ing share be­comes a lit­tle more valu­able and that’s the sec­ond im­por­tant point of share buy­backs. A share buy­back also sug­gests that the board thinks the stock is cheap, but I am less than im­pressed by that the­ory as the board’s job is man­age

Bri­tish Amer­i­can To­bacco Plc

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