Following announcement of share buyback scheme, Trustco makes a remarkable recovery
Shares of Trustco Group Holdings Ltd have staged a dramatic comeback since the company announced at the end of March that it will start a closed buyback programme as of 01 April 2020.
Trustco shares hit an all-time low of N$1.79 on Wednesday 25 March. Short sellers were exploiting the share’s demise, with bids as low as N$1.40 offered daily. This effectively relegated the Trustco share to a penny stock.
The share started its meteoric decline on 01 October last year after trading at N$10.45 the previous day, 30 September which also marked the end of the quarter. When the share hit N$1.79 at the end of March, the company’s market capitalisation had been more than halved, falling to just above N$3 billion.
On 31 March, Trustco announced in a SENS that it will repurchase a maximum of 194 million shares and 52 million through Trustco subsidiaries. The buyback started at the beginning of April and will be concluded by 30 June, also the date Trustco indicated to publish its financial information for the period ended 31 March 2020.
The Trustco share recouped some of its lost value in the few days before the repurchase announcement, but the movement was not spectacular. It was only from 03 April that interest in the share flared, pushing the price to N$4.20 this week Wednesday. This was, however, for a single deal and the share settled at N$4.15 and then at N$3.99 later in the day.
At these values, Trustco shares have increased in value by almost 56%, of which 40% happened only in the last week. It has also pushed the company’s market capitalisation back to above N$6 billion.
“The repurchase will be effected in accordance with the Listings Requirements of the JSE Limited and the general authority to repurchase shares granted by Trustco shareholders at the annual general meeting held on 12 September 2019. Accordingly, any repurchase of shares may not be executed at a price greater than 10% above the weighted average trading price for Trustco shares for the five business days immediately preceding the date on which any such repurchase is affected,” Trustco stated in the 31 March SENS.
