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Contra123

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  1. AFAIK Kerrisdale raised a separate, single-bet fund for their long on Intelsat. Similar to what they did on Dish (though that was a short).
  2. I’d also add that IMO “are shares trading at a discount to intrinsic value” is a question that I think mgt teams should not be focusing on when making repo decisions. IMO vast majority of mgt teams will be inclined to believe their stock is undervalued, all the time, even if they are heading up a secularly challenged biz like BBBY with accelerating negative topline growth and high fixed costs. It’s that cognitive bias, that denial, that eternal optimism. If instead mgt focused on facts e.g. consistent and accelerating top-line growth with expanding margins based on easy-to-verify secular industry or demographic factors (even if those are well-understood) and mainly relied on the presence of those things to make buy-backs (eg vs dividends), I think the end result could be quite satisfactory.
  3. IMO the question posed by the OP might as well be rephrased into “how do you determine if mgt team are good capital allocators” or “how do you know mgt’s capital allocation skill won’t get worse”. That’s a super hard, broad question IMO that’s hard to get right even if you have decent access to mgt. IME what gets people comfortable is a sophisticated (often buyside) background of mgt team and nice IR slidedecks that have the right buzzwords and explain the allocation framework in the right way + good track record of timing the buybacks. For me personally, favorite warning signs include buybacks when leverage is creeping up and buybacks accompanied by high stock compensation / issuance to mgt.
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