What Happens If a Company I Own Shares In Makes a Share Buy Back Offer For Shares Held at BMO InvestorLine?

Sometimes a company’s stock value decreases enough, or a company’s cash reserves increase so much, that the company decides it will re-purchase or buy back its own shares from its shareholders; this happened recently with a company whose stock I own in one of my BMO InvestorLine accounts: Here’s what I did.

How Did BMO InvestorLine Advise Me That a Company I Held Ownership In Had Offered to Buy Back its Own Common Shares?

I first heard about this share buyback program when I received a package in the mail from BMO InvestorLine. I owned shares in this company in my self-directed RRSP. BMO InvestorLine is my agent and holds the actual shares in its name on my behalf. So they sent me the information and asked for my instructions.

I next heard about the program via an email note sent to the email address I provided for correspondence about my BMO InvestorLine account. That email message directed me to look for details in my secure MyLink email at InvestorLine.

When I signed in to my InvestorLine account, I checked the secure email service MyLInk and there were details provided there about how to reply to this offer to purchase my shares and what my choices were.

How Did I Advise BMO InvestorLine Of My Decision Regarding the Share Buy Back Program?

The MyLink and regular mail information provided about the share re-purchase plan made it clear that I could not advise BMO InvestorLine on how to act on my behalf by providing instructions by email or fax. I had to telephone InvestorLine with my orders.

  1. So, I called the InvestorLine 1- 888 number.
  2. I typed in my ID password and account number on my phone.
  3. I selected 0 to speak to a representative.
  4. I confirmed the account and my name to the representative.
  5. I advised the representative of which of the Options I wished to select.
  6. The representative repeated my instructions for the recording and to ensure they were correct. The rep also confirmed that I only held the shares in that one account. (The rep would have asked for instructions for other holdings in other accounts if applicable.)
  7. We agreed on the instructions and ended the call. It took 15 seconds on a Tuesday morning at 9:30 a.m. ET.


What Types of Choices Were On my Share Buy Back Offer?

The company made me a variety of offers for their common share purchase program.

No fees would be charged to me for any sale.

I could offer to sell the entire amount of my holdings or only a portion.

I could offer to sell them for a fixed price between the two limits of the offer made by the company. (For example, they were offering to buy the common shares back at a price between $17 and $20.) I could choose that fixed price in 10 cent increments. (For example, I could choose to offer my shares for sale at $17.20.)

I could offer to sell them for a price to be set by the company when it bought the shares, which could be any price between $17 and $20.

I could choose not to offer any of my shares. I this case I would just continue to hold them as usual.

Why Would I Let the Company Choose the Price at Which to Buy My Shares?

It seemed odd at first to think someone would choose to let the company set the price at which they would buy the shares. Wouldn’t that mean I’d only get the lowest value for the shares?

Not necessarily. To get the lowest possible price, then enough Sellers would have to offer their shares for sale at the floating price. The Company was bound to set the purchase price as “the lowest price that enables it to purchase the maximum number of Shares properly tendered and not withdrawn pursuant to the Offer having an aggregate Purchase Price not exceeding $250 million.”

Still, you’d be taking a risk of getting the lowest price or close to it.

Did I Offer to Sell My Shares?

Nope. I have no reason to think this Company won’t continue to perform very well. I don’t need the cash. My commission at BMO is so low it would not be a factor in deciding to make a commission-free sale. So I’m holding onto my shares.

It’s probably a good decision, since the stock is already trading higher than the upper price limit. I suspect the entire buy back offer may expire unused!

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Did you ever participate in a share buy back program? Did it all proceed smoothly? Please share your experiences with a comment.

Why I Watch Each Dividend Get Paid to my BMO InvestorLine, CIBC Investor’s Edge and RBC Direct Investing Brokerage Accounts

I’ve worked with many computer programs over the years and I’ve found errors and bad coding in most of them. I also have a nasty suspicious mind that spots errors in the pricing on meat packages versus the huge posted sign rate and mysterious mistakes appearing in my bank accounts like the one for the safety deposit box I relinquished 4 years previously. All of these mistakes can be fixed if pointed out politely and quickly. So I keep track of each payment of interest, dividends, distributions and return of capital made to my brokerage accounts.

What I’ve Found Recently While Watching the Transaction and Activity History for My Brokerage Accounts

Here are three examples of things I’ve discovered by keeping an eye on deposits to my brokerage accounts.

A: New Flyer Industries, NFI, Did Not Pay a Dividend in February 2016 but Why?

Tracking the dividend payments alerted me to a change at New Flyer Industries. Although in all of 2015 and in January of 2016 it paid a tidy monthly dividend, in February 2016 nothing popped into my account.

Did NFI Cancel or Suspend Its 2016 Dividends or Cut Them?

I checked in with BMO InvestorLine via their secure email app. The reply was that NFI had not paid BMO any money to be distributed in trust as dividends nor had BMO received any notification of a pending dividend payment for February.
So I went to the investor Relations section at New Flyer Industries’ website.

New Flyer Industries Switches to Quarterly Dividend for 2016

I scanned the NFI News Releases but only found a reference to the December declaration of the dividend payable in January 2016.

I had to actually open a presentation to investors made in January 2016 to find what I was looking for and it was good news.

NFI is just changing to a quarterly payment schedule from its old method of making a distribution monthly.

Good News! NFI Plans to Increase Its Dividend in 2016

The news was actually better than I’d hoped: New Flyer also plans to increase its dividend by 12.9% starting in April 2016! That will raise the total annual dividend from $0.62CAD to $0.70.

This news will be officially announced in March 2016 by the Board of Directors if all goes to plan.

The record date will likely be March 31, 2016 with the dividend payable on April 15 2016.

The January 2016 payment was the last monthly payment.

So all good news there.

B: Keg Royalties Income Fund Trust Units Paid a Bonus Distribution in January 2016

I was pleasantly surprised to find I had too much money in my account after the Keg, KEG.UN, paid its distributions for January 28 2016. A closer look revealed they had paid the usual monthly distribution plus a second one which was almost as large.
I checked on the internet and discovered that a special distribution was declared on December 15 2015.

Free money. Cool!

C: Bank of Nova Scotia Declares Two Dividend Increases in One Year

I usually know a dividend increase is on its way because I keep an eye on the RedFlagDeals Investing discussion forum where members share news about dividend increases for Canadian companies. However, a few times I’ve been caught off guard when a company decides to increase its dividend twice in one year.

In 2015 BNS did just that. They raised the dividend in April and again in October. While dividend increases are easy to accept, dividend decreases are not. Keeping an eye on my transaction history helps me make sure I’m using the right projected income numbers for our budget. That’s not important right now when I’m just planning for retirement but it will be very important when we actually retire.

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Do you keep a close eye on the transaction or activity history for your brokerage account? Ever notice anything that worried or surprised you? Please share your experiences with a comment.