Public Company Share Repurchase-Cannibals

[valueventures]

1 hour ago, thowed said:

@schin Many thanks for this, very helpful, I will go back to reports & calls to keep working on it.

 

I've been similarly looking at BLDR - a bit of overlap, and another one with stellar 5-year performance but has rushed down since peak at end of Q1.  Given how much they've gone up, not really a surprise to see a correction.  But unlike much else in the market, the correction has brought them to quite reasonable valuations again.

 

It feels like the market is so simple & binary at the moment, and part of the issue for these sorts of companies is 'interest cuts not happening now' = bad.  I don't think this should necessarily be the case if management know what they're doing.

 

Only thing I remember is that last results were quite disappointing, but just need to be happy that that was just one of those occasional blips anybody can have, rather than a frequent occurrence (though I know sometimes these things happen in threes...).

 

There is a 2024 Substack write-up and a VIC 2023 write-up which you've probably seen, but I can dig out links if helpful.

 

I’m looking at BLDR too. Do you have a view on BLDR vs. CRH? Thanks!

[thowed]

@valueventures Sorry for late reply.  I don't know CRH so well - but much more Global than BLDR for starters.  Thanks for pointing out - I should do more work for comparison.

[matthew2129]

NXST has a $2B buyback authorized as of Friday, with a market cap of $6B

[FCharlie]

On 2/28/2024 at 10:33 AM, Vish_ram said:

I own and like MUSA, the greatest cannibal

Shoutout to you for recommending this one. I own it because of you. This is what it looks like when a growth company tries to spend its entire market cap buying its own shares. 

 

[Vish_ram]

18 hours ago, FCharlie said:

Shoutout to you for recommending this one. I own it because of you. This is what it looks like when a growth company tries to spend its entire market cap buying its own shares. 

 

 

check out GWW too.

 

[KPO]

OLN has bought back ~30% since issuing shares for the reverse Morris trust deal with Dow. This is more of an observation than an endorsement of the company’s current prospects.  It actually looks like management executed a significant portion of the buybacks at (cyclical?) peaks in FCF and share price.  
 

No position, but worth watching given their willingness to return capital to shareholders.

[Spekulatius]

On 3/19/2024 at 11:16 AM, Saluki said:

 

I owned this more than 15 years ago and made some money on it, if I remember correctly.  If it's the same one that I'm thinking of, I was impressed with how they made money in commodities, which are generally a terrible low-margin business, and that they had their headquarters in a small unassuming two story building with no frills.  It reminded me of early Walmart or the stories about Tom Murphy of CapCities. 

 

Some things that made me uncomfortable was that it was hard to find information about them. They didn't do interviews or investor presentations, and the 10Ks put out the information that was required by the SEC and nothing more.  At the same time they were always buying back shares. I had the impression that eventually they would just take it private. But Buffett likes to put as much info as possible out there regarding berkshire so that if his shareholders/partners want to sell, they will do so making an informed choice, knowing that he might be the buyer, so he doesn't want them to feel cheated.  It always seemed to me that the Seaboard people didn't mind if you happened to make money, but they were looking out for themselves.   

Belated answer. On stock buybacks, they only seem to buy back shares in size when SEB trades below book.  First time you am aware of they did this is was around 2002 when they took out 200k shares (they had 1.49M shares outstanding in 2001) and now again another ~180k shares. The last buy was from family members who apparently wanted out and did so at a discount to prevailing prices back then and around current prices a tad above 3k/share.

Yes, the business is crummy and hugely cyclical, but they do make decent money over the entire cycle it seems. The way they do buybacks tells me that they are stingy towards other family members which tells me that minority investors don’t get screwed here.

 

I actually find the annual shareholder letter refreshingly honest and straightforward. I also point that the pork business is turning around and earnings should be much better than last year at least.

 

I bought a few shares to keep me interested. It‘s a classical Graham stock play, imo. I do not think the stock has ever been cheaper in terms of price/ book since 2002 at least.

[Jaygo]

VVV - Valvoline has been putting up some pretty impressive numbers. Good revenue growth and about 18% buyback over the past 4 years.

 

Also just to highlight Artis REIT again from a while back. I know office is dead and all but Samir Manji has been very consistant in buying in commons and preffered. In 2024 they have spent 48 million CAD on a 600 million market cap

 

For commons they started the year at 112m shares out and now at 103.5 m shares out.

[Spekulatius]

MPC is one of the most aggressive cannibals I have ever seen. They started buybacks in early 2021 with ~650M shares and are now at 332M shares and still aggressively buying back. Stock has fallen from the peak, but is still almost a ten bagger from the COVI-19 panic lows. I have owned it before quite a while ago but not recently. Putting it back on my watchlist.

 

Edited October 22 by Spekulatius

[gfp]

8 hours ago, Spekulatius said:

MPC is one of the most aggressive cannibals I have ever seen. They started buybacks in early 202@ with ~650M shares and are now at 332M shares and still aggressively buying back. Stock has fallen from the peak, but is still almost a ten bagger from the COVI-19 panic lows. I have owned it before quite a while ago but not recently. Putting it back on my watchlist.

 

 

This chart does an even better job of showing the history of repurchase activity including the share issuance from the large Andeavor acquisition/merger in 2018

 

[FCharlie]

As if buying 20% of their shares in the past year wasn't awesome enough, GM should again be in the market very aggressively in the next quarter or two. No surprise because they have about $27 billion of cash on hand vs their $20 billion target and they just increased their FCF guidance yet again. Even with the stock at a new 52 week high, it still trades at 5X earnings

 

An excerpt from today's conf call:

 

Emmanuel Rosner

Okay. That's great to hear. And then I guess as a follow-up, I think you reiterated your commitment to try and reduce share count to 1 billion shares in early 2025. You would probably need to reduce your share count by like 120 million shares over the next 3 months or so. Is that like a $5 billion buyback? Is that the sort of acceleration that you're targeting just over the next few months essentially? Obviously, would be significantly faster than what we've seen recently. Just generally speaking, is this the right math? And then how should we think about future pace of buybacks?

Paul Jacobson

Yes. So I will agree with your math that it's about 120 million shares to get there. And we've said that we believe that we can get there in early 2025. So no specific comments on when that is or what the velocity might be. But I think over the past year or so, I think we've demonstrated our commitment to returning capital to shareholders.