FMG share price: $500 million share buy-back program extended
FMG has today announced plans to extend its on-market share buy-back program – valued at some A$500 million. This comes just one day after FMG’s CEO spoke at a key mining industry event in Melbourne.
Fortescue Metals Group (ASX: FMG) today announced that it intended to extend its on-market share buy-back program.
Bouncing back from a handful of moderately negative trading sessions, the FMG share price was up today by around 4.49%, as of 16:10 AEST.
The buy-back program in focus
FMG (ASX: FMG) noted that the buy-back program will be extended up until 10 October 2020, with the company re-establishing that ‘the total amount of the buy-back program [sits] at A$500 million.'
Speaking on this matter, FMG’s Company Secretary, Cameron Wilson, commented that:
‘The buy-back program remains an important part of the successful execution of Fortescue's capital management strategy.'
Indeed, as we covered not too long ago, FMG’s management have proven themselves particularly savvy of late, capitalising on the current low-rate environment, and recently ‘announcing the successful refinancing and repayment of [their] US$1.4 billion 2022 Syndicated Term Loan Facility (Term Loan).’
In saying all this, the buy-back program mentioned above does have some qualifications. For example, it was pointed out that:
'The number of shares purchased and timing of the buy-back will depend on Fortescue's share price and market conditions. Fortescue reserves the right to vary, suspend or terminate the buy-back at any time.'
FMG share price: is this a positive?
Overall, share buy-backs are generally seen as a positive for shareholders.
Ultimately, by reducing the shares floated on the open market through a buy-back program, investors effectively gain more ownership of the company. This is often particularly positive for institutional holders who may hold chunky positions in companies.
On this front – and according to MSN Finance – the largest institutional holders of FMG’s shares are: Capital Research Global Investors at (8.09%), Capital World Investors at (3.06%) and The Vanguard Group at (2.64%).
Other metrics, such as earnings per share (EPS) may also get a boost thanks to a share buy-back program.
Year-to-date, the FMG share price has now risen a sizable 103%.
Fortescue's (ASX: FMG) extended buy-back plans come just one day after the company’s esteemed CEO – Elizabeth Gaines – spoke at the Melbourne Mining Club industry event.
Drawing on a Reuters report, Elizabeth Gaines made the following stand-out comment:
‘Those who think that growth is going to slow, or that China won’t continue to look to develop broader markets for supply would be at risk of underestimating some important factors.’
As with all things it would seem of late: China is key.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets