NCR: Investment Thesis Update
In my previous article on this subject, I wrote,
The Blackstone Arrangements So Far: Good For Blackstone And Exiting Common Stock Holders; Not So Much For The Company And Remaining Shareholders
The situation remains much the same today for common stock shareholders. The only way an investor can realize a return from an investment in shares is through receipt of dividends and/or gains on sales, regardless of company performance. There is very often a dichotomy between the perceived financial performance of a company and the returns achieved by shareholders. For NCR common stock shareholders, this dichotomy is exacerbated by the existence of preference shares and actions of management. The results of these have been detrimental to common stock shareholders and to the benefit of preference shareholders. This is discussed in more detail further below. Common stock shareholders are not receiving dividend income, and this is unlikely to change. Common stock share repurchases increase the percentage of the company attributable to preference shareholders and have not resulted in meaningful and sustained increases in common stock share prices. Meanwhile, preference shareholders are receiving dividends in the form of additional preference shares, at 5.5% per year. From Q1 2020, the company has the option to pay these dividends in cash. Blackstone (BX) managed an exit of 49% of their 100% ownership of preference shares in early 2017, at prices in excess of $48 per share. Coincidentally, at that time, the common stock share price climbed above $49 for a short period. This supported Blackstone's sale of 49% of the preference shares. That provided an opportunity for some common stock shareholders to exit with good profits, before the share price quickly sank back to the low $30s. Those who did not exit at that time have seen the share price continue to ratchet down to a low of $20.93, on December 26, 2018. Since that time, talk of
If you wish to be notified of future articles, please click "Follow" next to my name at the top of this article.
- Or become an Analysts' Corner member. Share investing ideas with a like-minded group. Access 1View∞Scenarios™ dashboards to allow scenario testing for tickers of interest. You are welcome to Register today for an absolutely no obligation 14-day free trial. Analysts' Corner takes advantage of market sentiment and company fundamentals, to objectively target rates of return, rather than make purely qualitative assessments based on imperfect and inappropriate data.
- Register now to join in the discussions on GE's involvement in the hydrogen-electrical super highway.
