FCharlie

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.

I don't believe the current consensus is for 75+75+50. More likely 50+25+25 and finished. https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html

The chart above was showing M2. I believe what you are referencing with regards to savings accounts was on the M1 chart. M1 "tripled" in May of 2020 due to the reclassification you mention and a lot of people wrongly used that M1 chart to predict hyperinflation. M2 is indeed up almost 50% since 2020.

Hey, Parsad, Do you, or perhaps your sister, know whether Americans are allowed to buy real estate in Canada currently? There was a lot of talk about a two-year ban on foreign buyers but I never really heard any specifics about it and am not sure if it was ever implemented or not. Thanks.

GTE- 50% Free Cash Flow yield at current prices.

I very much agree with you Viking. I think the long-term plan is financial repression, even if the short-term plan is to kinda sorta fight inflation. Nominal GDP grew by 6.5% in Q1 even though the headline number says GDP contracted 1.5%. The Fed needs nominal GDP to grow faster than federal debt grows, which means they need consistent, elevated inflation and they also need to avoid a severe recession which would crush tax receipts, increase deficits, and drive debt/GDP even higher. We're probably not that far off from a technical recession and/or a Fed pivot/pause at interest rates that are still below the rate of inflation. If they pause, I'm not sure what happens. If they actually go back to QE, or "Not QE", I think it's look out above for gold and real estate prices. It's worth noting that nominal GDP grew from $1 trillion to $2.7 trillion throughout the 1970s in spite of the multiple recessions that took place during that decade, and debt as a percentage of GDP actually declined during that time to just 30%, which was a level that was low enough that it allowed the Fed to genuinely attack inflation.

When I was a kid I remember my grandmother telling me they paid $8,500 for their house back in the 1940s. I'm not sure why she told me that but I was blown away by how low the price was. So of course I asked my dad what he paid for the house we lived in in the 1980s, and the answer was $50,000. Those properties are $250,000-$300,000 today. There's nothing special about either one. They are average houses in average cities in North Carolina. But there's nothing average about the ability for real estate to act as an inflation hedge and to build wealth. There's nothing like it in the world actually. You get to borrow 75%-95% of the purchase price at interest rates that are probably going to be below inflation. The icing on the cake for rentals/vacation rentals is that you can borrow as many millions of dollars as you want and other people will happily repay it for you. I have 19 single-family properties today. Not only is there no chance in hell I'd sell any of them, I'm still looking for more. Especially vacation rentals. Those things are cash machines and you get to use them for free. I guess that's the long way of saying I voted no to all three categories in the above poll.

Hey guys I really appreciate you all bringing this to my attention. I opened an account for my LLC as a place to hold a portion of my cash reserves. It makes absolutely no sense to keep excessive amounts of cash sitting in checking accounts earning 0.02% with this as an alternative..... But as nice as it feels to get paid 7% or 9% on reserves, I must say, all I can think about is that I'm not actually gaining wealth, this is just the amount that everyone who's holding cash is actually losing via decreased purchasing power. Wow.

Makes me wonder why there aren't institutions simply bidding on REITs at this point.

Yes a tremendous amount of capital has been redirected into rentals, but think about the displacement created by the Fed's balance sheet. They displaced trillions of dollars of institutional capital and I don't know anyone who genuinely feels they will actually unwind their balance sheet. We are clearly in a housing deficit today. Maybe we have an oversupply in the future but that's likely many years away.

United Rentals went up 45X between 2009 and 2018. They survived the last downturn by selling underutilized equipment to bring in cash flow. Prior to the last month or so, EPS estimates were for $25/share next year so if we as a society ever get back to any kind of normal (which I think we will) the earnings power should still be there. May take years to get back there but URI should do well.