Share buybacks are few and far between right now, but here’s who is still doing them
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Since the COVID-19 share market plunge, buybacks have become a rare occurrence, but that hasn’t stopped Swick Mining Services (ASX:SWK) from announcing one this morning.
Swick plans to buy back $1m worth of its own shares. On top of that, the company has promised it will still pay a first-half interim dividend of 0.3c per share, or $910,000, saying that it is weathering the COVID-19 storm.
Share buybacks have been seen as controversial in recent weeks, particularly in the US with many companies begging for a government bailout but having spent billions on them in preceding years. However, Swick thinks it’s the best thing to do right now.
“The board considers that an on-market buyback is an appropriate capital management tool given the company’s strong financial position,” managing director Kent Swick said.
“The objectives of the buyback program are to increase both earnings per share and return on equity to provide further value to [Swick] shareholders in what are depressed equity market conditions for the mining services sector.”
Stockhead has contacted the company for further comment.
Shares rose 15 per cent on this morning’s news.
The majority of buybacks on the ASX come from listed funds and investment companies. But according to Bloomberg, there are two other small caps that have launched buybacks in recent weeks.
Serviced offices and IT services provider ServCorp (ARX:SRV) is buying back up to 3.1 per cent of its capital over the next three months.
The board said it would purchase shares as and when considered appropriate and it believed this was in the best interests of shareholders.
Water pump maker Waterco (ASX:WAT) has been doing a long-term campaign too. It has been buying back shares since May last year. Its target is up to 10 per cent of the company. Waterco also believes the move will improve shareholder returns and enhance capital efficiency.