Platinum Asset Management has announced plans to buy back up to 10% of its total shares on-market over the next 12 months, commencing on 4 October. Shares will only be bought back if the stock 'trades at a significant discount to its underlying value' although 'no target price has been set' (or at least announced).
The full 10% would amount to 59m shares, worth about $300m; and given that around 60% of the stock is held by insiders (including 53% by managing director Kerr Neilson and his ex-wife), it amounts to around a quarter of the remaining shares. It's also equivalent to around 15% of the annual trading volume. It's unlikely that Platinum will be able to buy that many back without pushing the price beyond what it's prepared to pay – which is presumably around current levels else it would have started sooner.
It's a clear indication, though, that Kerr Neilsen thinks Platinum is cheap – and the stock has accordingly jumped more than 10% today. We don't disagree with that view, but we'll continue to look for a greater margin of safety before we upgrade to Buy (as reflected by our $5 Buy price). HOLD.