Thomson Reuters: Buyback to Focus on Discounted London Shares

On Wednesday, Thomson Reuters Corp. (TRI) received approval from the Toronto Stock Exchange to renew its ongoing C$500-million share buyback program and allow it to purchase shares on both its North American and London listings.

The two sets of shares are not transferable and the London listing is still trading at a 16% discount to its counterparts in Toronto and New York.

However, UBS analyst Jeff Fan believes the company will continue focusing on the London shares, due to the niggling discount. Thomson Reuters has bought back about C$300-million worth of the European stock over the past six weeks, he said, which is helping to offset the significant short position in those shares (about 18% he estimates).

Mr. Fan expects the buyback to continue for another four weeks, although he said as it finishes the London stock could come under selling pressure. He also said that recent headcount reductions at investment banks could hamper revenue in the company's markets division, putting downward risk on earnings going forward.

Mr. Fan has a "sell rating on the North American stock, and a "neutral" rating on the London shares.