Avigilon Wastes $39 Million on Stock Buyback

By: John Honovich, Published on Jul 14, 2015

Avigilon is investing - in their own stock.

Over the past 2 months, Avigilon has spent nearly $40 million buying back their own stock.

In this note, we examine:

  • How they have 'profited' $22 million doing this
  • Why they undertook this endeavor
  • How this impacts their future growth plans

******** ** ********* - in ***** *** *****.

**** *** **** * months, ******** *** ***** nearly $** ******* ****** back ***** *** *****.

** **** ****, ** examine:

  • *** **** **** '********' $22 ******* ***** ****
  • *** **** ********* **** endeavor
  • *** **** ******* ***** future ****** *****

[***************]

Profited $**+ *******

** ****,******** ****** $*** *********** *********, ******* **** shares ** $** ****. Now, ******** ****** *.* million ****** **** ****** investors ** ** ******* price ** $**.** *** share, ********** **** $** of '******' *** ***** and * ***** ** more **** $** *******.

** ******, ** *******, Avigilon's ***** *********, ******** this ***********. ***********, ****** money *** ** ***'* investors ** * **** long-term ********.

*******, ** ******** ** making ***** *** ****, Avigilon *** ******* *** number ** ****** *********, which *********** ******** ******** per ***** **** ** total ******* ****** *** same.

But ****** *****

*******, *** ***** ** trading ** ~$**.** ** November ****, ***** **% lower **** **** **** bought *** ****** ** the ******. **** *** further ***** ***** *******, the ********* *** *** stop *** **** *** Avigilon *** *** **** funds *** ********* ** other ********.

Why **** ********* ****

******** ** ******** **** against ***** ******* ***** price. **** **** ******* the ***** ***** *** under $**, **** **** stopped *** *** *** to *** ** ******* requirements, *** ***** *** ~$18.50. *****, *** ***** is ~$**.**, ** ***** in *** ***** ******* below:

** *** ******** ****, it ********* *** ****** stabilize *** *****.

Growth ******

******** *** $** ******* in ****, ** ****** ** ** ****. *******, ******** ********** * $*** ******* credit *************** **** ****, ****** $80 ****** ******* **** to **** *** *********** purchase.

*** ~$** ******* ********* cuts *********** **** ***** former '********' *** ****** future ***********. ****, ***** the ******* ** ***** price *********** ********** ******, ******* *** ****** would ** **********.

Q2 *******

**** ** *** ********'* Q2 *******. ***** **** they ***** ~$** ******* buying **** ***** *****, they ****** *** * great ******* ** **** they **** ******* ***** share ***** *******.

****** - ** ******* moderately ************ *********. ***: ******** **** ******* ******** - ** ****

Comments (10)

Undisclosed #1

07/14/15 03:39pm

Given that they spent ~$40 million buying back their stock, they likely had a great quarter...

You know, of course that if they bought the stock back because they knew they were going to have a 'great' quarter, as you seem to imply, it would likely be considered insider trading and therefore illegal?

John Honovich

IPVM | In reply to Undisclosed #1 | 07/14/15 03:44pm

That's not my understanding especially since the rules prohibit buy backs before the end of the quarter (when a company would know for sure what the exact numbers were).

There's nothing here that I understand violate any rules.

I am simply saying that committing to such a purchase implies that they are confident that results are going to be good. But who knows, maybe they are trying to buy time. We'll see when the results are announced.

I would personally be surprised if the numbers were not much better than last quarter, given this initiative.

Eric Fleming Bonilha

In reply to Undisclosed #1 | 07/30/15 02:30pm

Well.. I guess that they definitely knew they would have a great quarter... So.. is this an Insider Trading?

http://avigilon.com/press-tools/press-releases/avigilon-corporation-reports-record-second-quarter-2015-results?hootPostID=70f6ddf01e68dc263415a5ddd72cc1d4

John Honovich

IPVM | In reply to Eric Fleming Bonilha | 07/30/15 02:32pm

No, not insider trading at all.

Also, stock price is down this morning after the results were released, so evidently not that great of a quarter.

Undisclosed #1

In reply to John Honovich | 07/30/15 03:06pm

Apparently they missed the street earnings estimate by a nickel...

But this is a good example of where they certainly could have gotten in trouble had they decided to buy at the precise moment they did because of knowledge that wasn't public yet.

Something like the patent enforcement program being announced...

Itamar Kerbel

07/15/15 06:02am

A company that buys back it stock is simply stating that it belives that the stock is undervalued.

If they have a great quarter it says that they are right.

Undisclosed #1

07/16/15 05:31pm

That's not my understanding especially since the rules prohibit buy backs before the end of the quarter (when a company would know for sure what the exact numbers were).

Do you know exactly what day the trading was stopped because of the coming end of the quarter? IMHO, it would appear that it didn't stop until at least the opening bell of the 29th of June.

Here's why:

2,100,000 - 360,000 = 1,740,000 (Total shares sold minus shares sold by 5/21)

17,740,000 / 66,726 = 26 days (Shares to sell / max. daily volume)

There are only 28 trading days between 5/22 and 7/1 (exclusive).

28 - 26 = 2 days.

IMHO, June 29 is therefore the earliest date they could have stopped, and that's assuming were able to trade the absolute maximum everyday since May 21.

Do you agree and/or do you have any detail regarding the schedule of the 2.1 million shares?

John Honovich

IPVM | In reply to Undisclosed #1 | 07/16/15 05:40pm

Yes, I reviewed the schedule of buybacks - last day in June they bought was June 22nd.

Undisclosed #1

In reply to John Honovich | 07/16/15 05:43pm

Is that a public document/can you share?

I'm curious if they exceeded the supposed daily limit or if one of my numbers is wrong.

Undisclosed #1

07/17/15 06:23pm

FWIW, it's unlikely that they stopped when they did because of end of the quarter blackout requirements for two reasons.

  1. End of quarter blackouts for the TSX typically extend from 1 week after the end of the quarter to 1 day after results are reported.
  2. They were permitted to buy even during blackout periods using their designated broker thru pre-determined programmatic trades which may take weeks to execute and are generally irrevocable.

They are of course not allowed to buy, nor create a programmatic broker buy, while in possession of any non-public material information.

Therefore assuming that these rules were followed, the fact that they bought $40 million at this point should not indicate a better quarter than the street is already expecting.

But I like you am expecting a 'great quarter'.

On another note it appears that they may be able to exceed their 66K volume restriction once a week with block trading. If you have the dailiy volumes in front of you, you may be able to check that.

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