Nick Bubb, retail analyst at Pali International, has put out an interesting note looking at Mike Ashley's shareholding in Sports Direct International.
To recap, Sports Direct yesterday announced it was calling an EGM on December 19 - the same day as its interim figures - to ask permission to buy back an extra 36m shares.
According to Bubb this will reduce the free float to 28%, meaning Ashley's share of the business will rise from 68% to 72%. If the move gets the go-ahead from shareholders, of course.
This latest proposal follows a concerted programme by the company to buy back its own shares either to put them into treasury or for cancellation.
Bubb said: "Between the final results on July 24 and the end of the first half on October 26, Sports Direct bought back 16% of the equity (for treasury or cancellation) for about £160m, at an average price of around 140p.
"Clearly, the company share buyback has reduced the potential cost to Mike Ashley of eventually taking it private, but the questions of when he does that and at what price remain shrouded in mystery. In the current environment why would he rush?
"We suspect there will be a big downgrade on December 19. We have cut our target price from 100p to 80p (which is where Mike Ashley once joked that the price could get to) and maintain our sell rating."
So far today, the company's shares have edged up 2.75p to 99.75p after yesterday's news. Don't forget, this business was floated at 300p as recently as February.
