Ault Alliance Anticipates Utilizing Previously Authorized Common Stock Repurchase Plan
- None.
- None.
Insights
The announcement of Ault Alliance's intention to utilize a stock repurchase program can be a significant signal to the market regarding the company's capital allocation strategy and its implications for shareholder value. The decision to buy back up to $50 million worth of common stock suggests that the management believes the company’s stock is undervalued. This could potentially indicate confidence in the company's future prospects and financial health. A repurchase program often leads to a reduction in the number of shares outstanding, which can increase earnings per share (EPS) and, theoretically, elevate the stock price.
However, it's crucial to analyze the source of funding for the buyback. The plan to use excess cash flow and potential future borrowing could affect the company's leverage and liquidity ratios. Investors should consider whether the repurchase program is the best use of the company's capital, especially in comparison to other potential investments or debt reduction. Additionally, the timing of the repurchase, set to begin after the filing of the Form 10-Q, suggests a strategic approach to market timing and compliance with insider trading regulations, specifically through the Rule 10b5-1 Plan.
From a market perspective, Ault Alliance's stock repurchase announcement may lead to a positive short-term reaction in the stock market, as it often signals a bullish outlook from the company's management. However, the impact on the stock price will also depend on market conditions and investor perception of the company's valuation and future earnings potential. The return of over 101,000 shares of preferred stock and approximately 680,000 shares of common stock to the treasury from a related party hedge fund liquidation also suggests a consolidation of ownership, which could be viewed favorably if it aligns with long-term strategic goals.
It is important to monitor the execution of the repurchase plan, as aggressive buybacks can sometimes be a red flag for artificially inflating stock prices. The market will also assess the impact of reduced public float on stock liquidity. A lower float can lead to higher stock volatility, which might deter some institutional investors. The repurchase program's expiration date provides a timeframe for investors to gauge the program's effectiveness and potential impact on the company's stock performance.
Compliance with the Rule 10b5-1 of the Securities Exchange Act of 1934 is a critical aspect of the repurchase program. This rule allows companies to conduct stock repurchases in a manner that is compliant with insider trading laws, even during periods when they might possess material non-public information. The establishment of the Rule 10b5-1 Plan imposes certain restrictions on the trades to ensure they are not manipulative and are conducted within the bounds of the law. It is worth noting that the plan must adhere to Rule 10b-18, which is designed to prevent stock price manipulation during buyback activities.
Investors should be aware of the legal framework governing such buybacks, as it provides a level of assurance that the repurchase activities are being conducted fairly and transparently. The plan's compliance with these rules is essential to maintain investor confidence and avoid potential legal complications that could arise from non-compliant buyback activities.
Under the Repurchase Program, the Board authorized the Company to repurchase up to
The timing and number of shares repurchased, if any, will depend on a variety of factors, including further Board approval, available financing as well as the Company’s cash position, the price and trading volume of the Company’s, general business and market conditions and restrictions on stock repurchases in existing loan agreements, among other items, in each case at the time when the Company may initiate share repurchases pursuant to the Rule 10b5-1 Plan. The Company intends to finance the repurchases from several sources, including excess cash flow from operations, as and when available, and proceeds from future borrowing arrangements or financings. The repurchase program is set to expire on December 15, 2024, but may be modified, suspended, or discontinued at any time prior thereto at the Company’s discretion. Any shares repurchased under the Repurchase Program will be returned to treasury and will reduce the public float of common stock. The potential institution of the Repurchase Program is, in the view of the Company’s management, another step towards enhancing stockholder value and would follow the Company’s previously announced return to treasury of 101,362 shares of the Company’s
Milton “Todd” Ault III, Founder and Executive Chairman of Ault Alliance, commented on the Repurchase Program, saying, “While the Company has explored methods previously to buy back common stock from stockholders, including the exchange offers announced in March 2023, and November 2023, the Company ultimately determined that the most efficient way to execute a buyback program was to work through its existing and approved share repurchase program of up to
For more information on Ault Alliance and its subsidiaries, Ault Alliance recommends that stockholders, investors, and any other interested parties read Ault Alliance’s public filings and press releases available under the Investor Relations section at www.Ault.com or at www.sec.gov.
About Ault Alliance, Inc.
Ault Alliance, Inc. is a diversified holding company pursuing growth by acquiring undervalued businesses and disruptive technologies with a global impact. Through its wholly and majority-owned subsidiaries and strategic investments, Ault Alliance owns and operates a data center at which it mines Bitcoin and offers colocation and hosting services for the emerging artificial intelligence ecosystems and other industries, and provides mission-critical products that support a diverse range of industries, including a metaverse platform, oil exploration, crane services, defense/aerospace, industrial, automotive, medical/biopharma, consumer electronics, hotel operations and textiles. In addition, Ault Alliance extends credit to select entrepreneurial businesses through a licensed lending subsidiary. Ault Alliance’s headquarters are located at 11411 Southern Highlands Parkway, Suite 240,
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as “believes,” “plans,” “anticipates,” “projects,” “estimates,” “expects,” “intends,” “strategy,” “future,” “opportunity,” “may,” “will,” “should,” “could,” “potential,” or similar expressions. Statements that are not historical facts are forward-looking statements. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties.
Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update any of them publicly in light of new information or future events. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors. More information, including potential risk factors, that could affect the Company’s business and financial results are included in the Company’s filings with the
View source version on businesswire.com: https://www.businesswire.com/news/home/20240213922875/en/
Ault Alliance Investor Contact:
IR@Ault.com or 1-888-753-2235
Source: Ault Alliance, Inc.
FAQ
When will Ault Alliance's stock repurchase program begin?
How much common stock can Ault Alliance repurchase under the program?
How will Ault Alliance finance the stock repurchases?
What factors will determine the timing and number of shares repurchased?
When is the Repurchase Program set to expire?
