The Platinum Asset Management Ltd (ASX: PTM) share price has opened lower today, despite the company announcing this morning that it intends to embark on a new share buy-back program. Platinum shares closed at $4.04 yesterday, but today opened at the $4 mark and have trended only slightly upwards at the time of writing to $4.02.
What did Platinum announce?
Here's some of what the company had to say:
Platinum Asset Management Limited today announced its intention to extend its on-market share buy-back for up to 10 per cent of PTM's issued share capital for a further period of up to 12 months.
The purpose of extending the share buy-back period and therefore the notice, is to enable PTM, as part of its ongoing capital management policy, to buy-back its shares (without having to lodge a new notice at least 14 days prior to any proposed buy-back transaction) should the PTM share price trade at a significant discount to its underlying value.
True to its value investing philosophies, Platinum also indicated that they have not yet made any purchases and are looking for a 'significant event' that would cause the Platinum stock price to drop below its intrinsic value before significantly buying back shares – therefore returning value to shareholders.
The company has provided itself the opportunity to buy back up to 58,667,890 shares at any time between 4 October 2019 (when the current program ends) and 3 October 2020.
What does this mean for Platinum going forward?
Share buy-backs increase earnings-per-share (EPS) for existing shareholders, as it reduces the supply of existing shares on the market, so this is good news for Platinum's embattled investors.
Platinum has been enduring significant difficulties as of late – the embattled fund manager has failed to shine over the past few years as its value investing methodology has lagged the markets. This in turn has led to an exodus of customers and funds under management (FUM). In August alone, the company reported outflows of $407 million, leaving it with $24.4 billion in FUM. Platinum shares are today worth under half of what they were in January 2018, when shares were going for more than $8.
