Received wisdom suggests share buybacks usually occur at the worst possible moment: when market valuations are at their highest, and management teams at their most optimistic. Fortunately for investors in Quilter (QLT), the wealth manager’s repurchase programme could barely have been better timed so far this year.
On 11 March, Quilter told the market it had instructed JP Morgan to purchase up to £50m-worth of its London- and Johannesburg-listed shares before 29 May. Within the first three weeks, during which time equity markets crashed and Quilter shares dropped to as low as 98p, the investment bank had acquired £27.9m-worth of shares.
Including the remaining £22.3m of on-market purchases, Quilter’s average buyback price came to 116.14p per share. Historic price data shows the stock’s 30-day simple moving average has only dipped below this level on 11 trading sessions so far in 2020.
Management has now instructed Goldman Sachs to manage the next £75m tranche of repurchases by the end of November, pending Financial Conduct Authority (FCA) approval. The buybacks are part of a £375m capital return plan following the 2019 sale of Quilter’s high-margin life assurance book to SwissRe.
