Argentine companies take advantage of the market crash to buy back their shares

The collapse of Argentine stock prices, with the Merval faces dollar declines of 12% so far this yearleads several companies to choose to buy back their card as an investment strategy.

Pampa Energía, Cresud and Supervielle are three of the companies that have chosen this path. And according to market analysts, in the medium term there may be other companies heading in the same direction.

Gustavo Neffa, director of Research for Traders, specifies that Cresud has announced an amount to invest up to 1,000 million dollars, with a maximum price of $ 6 for ADR – the US-listed stock – and a maximum of $ 200 per local share. Today the ADR enters $ 4.95.

In the case of Grupo Supervielle, the limit to be invested is $ 2,000 million, a maximum price to pay of $ 2.20 for ADR and $ 138 per local share. The present value of the security is $ 1.52.

“Businessmen see their actions for the floor and Given the lack of a better destination, they decide to bet on business. It’s a great internal signal, “says Neffa.

Juan José Vázquez, head of research at Cohen, explains that the companies buy back their shares give a destination to the pesos which they cannot use to buy dollars at the official exchange rate.

In the case of Pampa Energía, Vázquez specifies that the buyback was open until a few weeks ago. “Now the price has already exceeded some of the limits that they had set. They had decided to invest until when 30 million dollars, with a cap of USD 22 per ADR. Pampa is a company that continually repurchases its shares. In less than five years they have acquired 33% of the company’s share capital “.

“The reality is that due to the economic circumstances of the country, most companies have a huge price punishment, but this does not necessarily reflect the specific situation of companies. There are companies that have a low level of debt and until recently had attractive margins, “says Vázquez.

“They have a lot of pesos and the need to make those funds available leads them to end up buying the business they know best, which is the one they run,” he says.

For Vázquez there are chances that more companies will come out to do so. One of the cases could be that of Ternium. “They have cash for more than $ 998 million in January 2022 and on the dollar or cash cable with liquidity is the value of the company 2,348 million dollars. Here because It would be more than logical if they did. “.

For Brian Torchia, Head of Corporate Finance at Pgk Consultores, this type of operation sends a signal to the market: “An actor who has the best possible information on the performance of an asset he goes to buy it because he sees that it is undervalued“.

“In this way, the goal is for the rest of the market players to read that signal as a symbolic “minimum” of the price of the asset “, indicates Torchia.

“Another alternative is that it is a purely recapitalization action of the company. That is, the company has a certain volume of surplus or reserves available and based on the identification of future flows, it decides to buy back,” says Torchia.

For the analyst, “to the extent that these types of strategic attitudes or actions begin to be observed in a generalized way, they can become a pretty attractive sign sufficient to generate more genuine movements in price flows “.

AQ