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Public Company Share Repurchase-Cannibals


nickenumbers
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All,

 

I have a growing awareness of Cannibals, Public Companies with share repurchase programs. I am not talking about token, Micky Mouse share repurchase.  We are talking about large meaningful share repurchase. 

 

I have always known what they are, but with CoBF input regarding Henry Singleton/Teledyne, and after reading the book Outsiders, I have a far better appreciation for this technique.

 

If a company properly executes a share repurchase capital allocation move, at the right time and at the right price, relative to their other alternatives.  Lets say that the best chess move for the company was to repurchase their own shares.  And lets say that they perform that to the tune of 5-10% of share outstanding.  And year after year, they continue to shrink the shares outstanding, and reduce the market cap.

 

At some point the Sr. Managers would have a choice to either take the company private, or something else..  Is there a minimum market cap so that the Sr. Managers can adequately extract maximum value from potential future investors. 

 

What would be an end game strategy when the Sr. Managers know that they are sitting on a rocket-ship of a company that the larger market is overlooking or has not yet discovered?

 

What usually happens in these situations?

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