Here are Frans’s comments on how Ovaro is proposing quite a significant additional dividend. 
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This is indeed very surprising. Ovaro just raised additional debt and is now distributing large extraordinary dividends.
Why weren’t share buybacks continued?
Perhaps this is then a sensible way for owners to return/release capital?
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The market clearly thought it was good news when the stock, which had been languishing for a long time, rose almost 7.5%, but… When the P/B ratio is as low as it is, buying back shares would have seemed to me a smarter way to distribute funds, if it was even necessary to distribute them at this stage instead of using them to pay down debt or keeping them as a reserve for new projects. This mainly reminds me of Investor House’s absurd stock surge based on dividend news in late summer, albeit on a smaller scale. Even though the stock I own to a moderate extent did rise now, I can’t really be happy when a) the company’s board made what I consider a foolish proposal and when b) the market reacted to it foolishly, in my opinion. Well, one could always lighten the ownership and buy, for example, Asuntosalkku or Kojamo instead… But perhaps I’ll still monitor the situation, as Ovaro isn’t expensive yet.
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I estimate the same. I would have preferred share buybacks.
I assessed point b) the same way, so I reduced a reasonable portion from my modest position, even though I still consider Ovaro reasonably affordable.
Let’s see if I can get the shares back cheaper.
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The distribution of dividends would somewhat indicate that the company has a good outlook on its financial situation.
Discussions have certainly taken place with financiers, and one would assume that new financings include some form of covenants based on solvency.
I would assume that sales negotiations for current properties might be underway.
If the company has an outlook that after events in the near future, it will have excess capital and no major new investment opportunities are in sight, then it is somewhat logical to distribute it to owners.
This would allow the company to achieve a more targeted balance sheet position, enabling higher returns on equity. The company has commented that the buy-develop-sell model is intended to be operated in a capital-efficient manner and to rotate the balance sheet. If successful, there are opportunities to achieve good returns on equity, in which case P/B ratios should also rise, provided evidence of this begins to emerge.
A share buyback would have been a good alternative, but it is quite slow.
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Follow-up to previous: I did, however, end up selling my entire position. I couldn’t quite hold out until last week’s peak, but I still made about a 15% profit with about half a year of ownership. I will keep an eye on Ovaro and might buy the shares back if the price is attractive enough again.
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Here are Frans’s comments on how Ovaro is implementing an extensive financing and real estate arrangement that improves, among other things, the company’s solvency, etc.
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