Just one month after completing the tender offer that was launched in December the company is back with yet another tender offer. In December Clarke tried to buy 2.5 million shares at $9.5/share, but they managed to buy just 665 thousand shares at that price. They are not giving up though and are now offering $10/share for 2 million shares. I’m very pleased to see that the company continues to try to aggressively buy back shares. Clarke has a lot of cash on the balance sheet and is at the same time trading at a sizable discount to both NAV/share and intrinsic value. Buying back shares is a great use of capital, and the company shares that view. From the MD&A that was released yesterday in combination with their annual report:

Finally, we continue to view our Common Shares as undervalued. As long as this situation exists, we will continue to repurchase our Common Shares as it is the equivalent of buying a dollar for a fraction of that amount. We repurchased 1,243,846 Common Shares under our normal course issuer bid (“NCIB”) in 2014 and 665,330 shares under our SIB in early 2015, all at a discount to our book value per share.

With the stock currently trading at $9.60 Clarke is (again) not offering a big premium to entice shareholders to tender their stock: just 5.2% (taking into account a CA$0.10/share dividend that will be payable in the meantime). If the company will be able to successfully complete the tender offer they will increase NAV/share with ~CA$0.30 which represent an increase of ~2.4%. Doesn’t sound like a lot, but I think that’s a pretty awesome result.

Disclosure

Author is long Clarke