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Silicon Motion (SIMO) announces $200m stock buyback

By Andreas Ismar

09:25, 7 December 2021

NAND flash drive plugged into a computer
NAND flash drive plugged into a computer – Photo: Shutterstock

Silicon Motion earmarks $200m to buyback its American depository share (ADS) in the coming six months following its previous repurchase programme ended slightly over two weeks ago.

The company, which produces flash controllers used to manage the data stored in NAND flash memory and communicate with electronic devices, said the buyback is part of returning excess capital to shareholders.

“We have a long track record of returning excess capital to shareholders, primarily through dividends, but also through share repurchases. On October 25, we announced our annual dividend that is 43% higher than the previous one. We are now following up with a program to purchase up to $200 million of our ADSs over the next six months,” president and CEO Wallace Kou said in a statement.

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Continuation of previous buyback

The share buyback comes just slightly over two weeks after the previous one ended. In November 2018, the company set aside $200m to buyback shares for 24 months – which was then extended to 36 months.

The buybacks have created positive sentiment on the stock, with share price surging over 60% so far this year. In pre-market hours on Nasdaq on Tuesday, the stock rose 1.3%, extending a 1.2% gain on Monday.

Read more: Samsung Electronics (005930) merges consumer, mobile divisions

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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