FCharlie

I like Medtronic for dividends. You aren't reaching too hard for yield but you get over 3%. The stock isn't expensive, plus there's been 46 consecutive years of dividend increases

I thought this was an interesting interview on the subject of gold and gold miners

Thanks for mentioning this one. In 2015 their market cap was about $3 billion and they've spent $3 billion buying shares since that time. They've opened about 500 new locations in that time. They are a lot like AutoZone.

GM purchased 15% of their shares in December, with another 5-6% likely repurchased in Q1 as their ASR is settled. 2024 EPS estimates have risen from $6.76 to $9.00 since this buyback was announced, and the stock has risen 29%. Interestingly, the stock traded at about 4.5X earnings before and still trades at about 4.5X earnings. I don't follow this company closely, but let's say GM continues to generate $10 billion of free cash flow going forward, and continues buying stock at 4.5X earnings, how long until the stock rerates higher to say 7.5X earnings? And is 7.5X earnings appropriate if you are growing EPS by 15-20% annually? Why not 9X earnings? The potential returns get incredibly appealing in these types of situations, and these situations seem to be more and more common as the breadth of the market continues to diverge with many companies share prices left for dead. Total Number of Shares Purchased(a)(b) Weighted-Average Price Paid per Share(c) Total Number of Shares Purchased Under Announced Programs(b) Approximate Dollar Value of Shares That May Yet be Purchased Under Announced Programs(b) October 1, 2023 through October 31, 2023 25,399 $ 32.32 — $1.4 billion November 1, 2023 through November 30, 2023 — $ — — $11.4 billion December 1, 2023 through December 31, 2023 215,202,490 $ 31.60 215,189,872 $1.4 billion Total 215,227,889 $ 31.60 215,189,872

I don't recall AutoZone ever trading for 7X earnings at any point. 12-14X earnings yes. The thing about AutoZone is that they started deploying all free cash flow into buybacks in 1999 and they just never stopped. Like clockwork, every year shares decline 7%, 8% per year and the store count always grew. I don't expect it will ever trade below 12-14X earnings because they are too consistent. Their margins are too high. They sell something that you either need, or don't need. Imagine hearing on the radio that AutoZone has a sale 30% off starters. You think, but I don't need a starter. AutoZone knows you only need a part like that in the event of failure at which point you'll pay whatever price you have to. So they basically don't discount anything and their gross margins are over 50%. They grow eps every single year. I can't remember any year their eps declined. AutoNation has much lower margins, bogged down by new car margins which are historically not very high. Finance as well as parts & service make all the money. AutoNation historically trades around or just below 10X earnings so being at 7X currently they seem to be all too happy to deploy all free cash flow into buybacks. They, unlike AutoZone, will turn off the buyback if the price gets high enough. AutoNation also has the AutoNation USA division, which sells used cars. They only have 19 locations now, up from about 5 a few years ago. Carmax has hundreds of locations and trades at a much higher valuation so if all AutoNation ever did going forward was build a few hundred more used dealerships and keep shrinking their share count 10% per year, eventually rerating to KMXs multiple I'd be delighted. Also, both companies own lots of real estate which is comforting in the event that there ever was a true disruption to their industries.

AutoNation bought another 3% of shares in the quarter. 13% for the year. 65% of shares in the last decade. Still trades 6-7 P/E. It's honestly remarkable how skewed everything is and how many stocks trade at single digit multiples even as they are gobbling up shares as fast as they can. If active management ever comes back or if the MAG7 ever deflate, it could get really exciting for these companies that have hardly any shares left to divide by. https://investors.autonation.com/news-and-events/press-releases/press-release-details/2024/AutoNation-Reports-Fourth-Quarter-and-Full-Year-Results/default.aspx

A lot of public libraries have printed copies available. I've spent countless hours looking at it and making copies of pages when I stumbled across something interesting.

Welcome to the APA club. I've been riding this one up and down and ultimately nowhere for a couple of years now with nothing to show for it but dividends and a few puts that I sold that expired. I too think it's seriously undervalued, yes for Suriname, but also for the LNG contract with Cheniere that at one point would have been worth $1.5 billion annually on its own but today is more like $0.5 billion. Every time APA gets up in the mid $40s I think it's going to break out yet every time it has just round tripped back down to these levels. I think you will do well with this entry point. One thing that has been frustrating to me is that APA has a habit of pausing their buyback quite often for news that hasn't been disclosed, hopefully they can buy back a solid amount of shares going forward because the valuation is really low.

Another 1.3 million AutoNation shares repurchased in Q3. Only 42.8 million to go https://investors.autonation.com/news-and-events/press-releases/press-release-details/2023/AutoNation-Reports-Third-Quarter-2023-Results/default.aspx Capital Allocation, Liquidity and Leverage During the quarter, cash from operating activities totaled $256 million, capital expenditures were $87 million, and AutoNation repurchased 1.3 million shares of common stock for an aggregate purchase price of $200 million. As of October 25, 2023, AutoNation has approximately $439 million remaining under its current Board authorization for share repurchase. The Company has approximately 43 million shares outstanding, which represents a 10% decrease year-to-date and a 49% decrease from the 83 million shares outstanding at the end of 2020.

Shittybank June 30, 2015: 3,009,845,273 shares outstanding. Stonk Price $55.24 Market Cap $166 billion Sept 19, 2023: 1,925,702,484 shares outstanding. Stonk Price $42.68 Market Cap $82 billion Shares down by 36% Market Cap down by 51% I think Shittybank has the ingredients to be one of the best performing cannibals over the next one to two decades. It's universally unloved. No one has high expectations for it, yet they will probably spend their entire market cap on buybacks by the end of the decade.

I believe they were referring to AutoNation

Yeah, Thanks Spek for bringing Discover to my attention... I bought small amounts of DFS at $91, $90, $89, and now $88 yesterday. I'm planning on picking up a small amount each time it trades lower. It's interesting how some companies continue to get awarded mediocre valuations no matter what they do and it serves up the opportunity to just allocate all your profit directly at buybacks. Like "here's your stock at 6X earnings, have all you want we don't care"

Well I think we can all agree that AutoZone wins the award for greatest cannibal of all-time. In 1998, when they first began buying back stock, their market cap was just $3.5 billion. Since then they have repurchased $33.8 billion of shares. Since 1998, the stock has risen from $25 to $2,500. https://about.autozone.com/news-releases/news-release-details/autozone-4th-quarter-domestic-same-store-sales-increase-17-4th Other Selected Financial Information (in thousands) August 26, 2023 August 27, 2022 Cumulative share repurchases ($ since fiscal 1998) $ 33,815,711 $ 30,092,422 Remaining share repurchase authorization ($) 1,834,289 1,057,578 Cumulative share repurchases (shares since fiscal 1998) 154,032 152,508 Shares outstanding, end of quarter 17,857 19,126

If you go back, way back to 2008, Eddie Lampert was filing form 4s buying hundreds of thousands, sometimes millions of shares of AutoNation at prices between $5-$13 per share. At the time Eddie owned about 58 million shares. Today AutoNation has only 44 million shares outstanding. Eddie has needed to sell periodically for years or he'd take the company private. That's a pretty nice problem to have. Very similar situation with Eddie and AutoZone. If he'd never sold a share of that he'd basically have taken the company private by now. I don't think either company is leaving anyone holding any bags. It's just their preferred method of capital allocation. https://www.sec.gov/Archives/edgar/data/350698/000089375008000610/xslF345X03/edgar.xml https://www.sec.gov/Archives/edgar/data/350698/000089375008000602/xslF345X03/edgar.xml https://www.sec.gov/Archives/edgar/data/350698/000089375008000598/xslF345X03/edgar.xml

From today's earnings release from AutoNation, the company has repurchased 47% of it's shares since year end 2020 https://investors.autonation.com/news-and-events/press-releases/press-release-details/2023/AutoNation-Reports-Second-Quarter-2023-Results/default.aspx During the Second Quarter of 2023, AutoNation repurchased 1.6 million shares of common stock for an aggregate purchase price of $207 million. AutoNation has approximately $670 million remaining Board authorization for share repurchase. The Company has approximately 44 million shares outstanding, which represents an 8% decrease year-to-date and a 47% decrease from the 83 million shares outstanding at the end of 2020.

Truist (BB&T/SunTrust) 1997 $31 2023 $31 I bought this morning.

Yes sadly Shittybank isn't buying right now, but the reality is they should be buying by mid-year 2023 and the stock is highly unlikely to trade above tangible book value between now and then, or even after they resume buying. The bank earns about $7/share, pays $2 in dividends plus a little more for preferred dividends... Retained earnings with some help from AOCI will drive tangible book value to $100/share in a few years. I think this is what makes me so excited for C. The stock needs to go up 55% just to reach tangible book value and by the time it actually does go up 55%, tangible book value will certainly be higher.

One of the best, if not the actual best performing stock of all time is Altria/Philip Morris. A core business that endlessly churns out higher profits and constant share repurchases, while being cursed, (or blessed) with a mediocre valuation the entire time. For the most part, AutoZone also fits this description really well. It would seem like the right way to think about this list is to ask yourself which of these companies are nearly certain to be better off ten years from now, and how does the market value them in the meantime as they are executing future buybacks. The DDS situation is impressive, but going forward it will be much harder for them to keep that buyback pace up unless the share price declines materially or earnings increase materially. I would imagine DDS would gradually fall from the top of the list towards the bottom. The stock that stands out the most to me for potential opportunity is Citibank. Sure it's near the bottom of the list now, but this is a company that has repurchased over a billion shares in the last handful of years and no one cares even a little bit. Also, I know they are inferior to JPMorgan and Bank of America, but it's hard to imagine a future where Citi doesn't still dominate credit cards and global corporate banking. The stock continually trades between 5 and 7 times earnings, and their #1 capital allocation priority is buybacks. I'd be really interested in revisiting this list in the future to see how things are going.

AutoNation is another retailer that has been a massive buyer of their own shares over the last fifteen years. I always assumed Eddie Lampert was a major influencer in AZO and AN's capital allocation. He was on the board of both and a super sized investor in both. Both were great investments... Then he tried the aggressive buyback strategy at Sears and completely bombed. So yeah, It's interesting how it can go both ways.

I'm curious who the top 5 cannibals are? I would guess AutoZone would be up there somewhere. Maybe Apple?

A lot of the Canadian oil producers are planning massive buybacks as a percentage of their market caps. Athabasca Oil is projecting $1.1 billion of free cash flow in the next three years with just a $1.4 billion market cap. They have more cash than debt on the balance sheet, and plan to allocate 75% of their free cash flow to buybacks. So, doing the math, they could buy over half their shares in the next few years.

Chevron's $75 billion buyback is a massive wake up call to anyone who's sitting on the fence undecided about whether these oil companies are serious about returning cash. I expect 10%-20% buyback announcements across much of the sector. Specific to Chevron, however, I did a little looking in 10Qs and Ks after the announcement and found that Chevron's shares outstanding between June 2021 and Sept 2022 were unchanged. This is in spite of them repurchasing 61 million shares during that time!! They do have a note in their 10Q that they don't expect that level of stock option issuance going forward but wow that's some serious stock compensation.

If you are an index investor who buys only once and never sells, it's easy to have a lost decade. But the term lost decade implies the market went nowhere, which is really misleading. From 2000-2002 the market dropped almost 50%. From 2002-2006 there was a really strong rally back to the highs of 2000, followed by the 2008-2009 crash which took us back down to the 2002 lows. Then it took until 2013 to recover from 2008-2009 back to the 2000 highs. Put it all together and an index investor saw no gains for thirteen years. That said, however, this was a great time for value investors who bought things like tobacco and energy stocks. I had 30% of my money in Philip Morris/Altria from 2000-2010 and it blew away everything else I had. But that was starting from a point where it had about an 8% dividend yield and a mid single-digit PE. I believe RJ Reynolds Tobacco had a 15% dividend yield in the year 2000 and they kept raising the dividend year after year because there was nothing actually wrong with their core business. Rather it was just completely unpopular relative to things like Cisco, Qualcomm, and Wal Mart which were all trading at 50-100 times earnings. Today you could argue that we have a similar situation where popular stocks like Amazon, Microsoft, Tesla and others will go nowhere for a decade or longer, but you have other really profitable companies that trade for a fraction of their liquidation values like banks and real estate companies that could do extremely well going forward. If you believe we are heading into a lost decade, you have to avoid indexes and pick individual stocks. And if you don't want to pick stocks and only feel comfortable buying indexes, then you have to buy or average down after they have significant drawdowns and be willing to cash out or lighten up when everything is going great. A decade is a long time. There will be plenty of opportunity.

St Joe. Decent volume at prices below their Q2 buyback price of $37.83.

For what it's worth to the discussion, my dad just listed one of his rental properties for sale. Under contract in one day for just slightly ($500) over ask price. This is in North Carolina.