On the 3rd of August 2016, Seven Group Holdings (ASX Code: SVW) announced the on-market purchase of up 10% of TELYS4 (ASX Code: SVWPA) subject to market conditions. The group intends complete this over the next 12 months.   Over the past 12 months Seven Group has undergone an extensive share buy-back as part of their capital management strategy. To date 5% of total ordinary shares on issue had been repurchased on-market at a total of cost $72.1 million. This shareholder friendly strategy is not surprising given Kerry Stokes (Chairman) owns ~70% of the ordinary shares on issue.   For this reason, it was unlikely that Seven Group would cease dividends on TELYS4 as doing so would trigger the dividend stopper. This would prevent capital distributions from being made to ordinary shareholders which would be against the group’s overarching strategy of maximising shareholder value. This was the primary thesis behind our recommendation.   Our rationale was based on the fact the market was pricing in a high probability that dividends on TELYS4 would be deferred. This argument was inconsistent with our view on the issuer and hence, warranted a BUY recommendation.   Currently TELSY4 is up ~11% from yesterday’s close and up ~20% from our last recommendation (20 May 2016) update.   We continue to maintain our Buy recommendation on the basis of the partial buy-back supporting trading conditions and the possibility further buy-backs over the medium term.