Sweet Posted July 22, 2023 Share Posted July 22, 2023 7 hours ago, FCharlie said: 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. How is this trading at a PE of 6? What’s the bad news story? Link to comment Share on other sites More sharing options...
Saluki Posted July 22, 2023 Share Posted July 22, 2023 52 minutes ago, Sweet said: How is this trading at a PE of 6? What’s the bad news story? Eddie Lampert sold more than $20mm of AN stock in the past couple of months. One way to look at this is that the buybacks are great for current shareholders. Another way is that the insiders are using the cash register to keep the price high so they can sell out and leave you holding the bag. Which is it? I don't know. Olin has a similar look. They are buying back 26% of the shares but several insiders are selling hundreds of millions in stock. Why? STNG is buying back 20% of their shares, but I haven't seen insider selling, so I'm holding. But if I saw the company buying while insiders are selling, I would definitely want to understand why. Link to comment Share on other sites More sharing options...
FCharlie Posted July 22, 2023 Share Posted July 22, 2023 1 hour ago, Saluki said: Eddie Lampert sold more than $20mm of AN stock in the past couple of months. One way to look at this is that the buybacks are great for current shareholders. Another way is that the insiders are using the cash register to keep the price high so they can sell out and leave you holding the bag. Which is it? I don't know. 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 Link to comment Share on other sites More sharing options...
Saluki Posted July 22, 2023 Share Posted July 22, 2023 5 minutes ago, FCharlie said: 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 http://openinsider.com/search?q=An Cannon ,Coleman and Lower have all sold over $1mm in the past few months too. I'm not long or short AN, but if I was I would ask "well, that's Eddie's reason for selling, but why are the other ones selling?" You may be right and it's a great company selling at a 6PE with nothing wrong with it, but digging deeper and understanding the bear case might help you avoid an unforced error. Usually the really cheap stuff has some hair on it. I've made money dumpster diving, just know what you are buying and the what the problems are. Good luck. Link to comment Share on other sites More sharing options...
Sweet Posted July 22, 2023 Share Posted July 22, 2023 1 hour ago, Saluki said: Eddie Lampert sold more than $20mm of AN stock in the past couple of months. One way to look at this is that the buybacks are great for current shareholders. Another way is that the insiders are using the cash register to keep the price high so they can sell out and leave you holding the bag. Which is it? I don't know. Olin has a similar look. They are buying back 26% of the shares but several insiders are selling hundreds of millions in stock. Why? STNG is buying back 20% of their shares, but I haven't seen insider selling, so I'm holding. But if I saw the company buying while insiders are selling, I would definitely want to understand why. Strange, why sell so much shares when the company is cannibalising so much outstanding shares? Thanks for info. Link to comment Share on other sites More sharing options...
FCharlie Posted September 19, 2023 Share Posted September 19, 2023 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 Link to comment Share on other sites More sharing options...
Sweet Posted September 19, 2023 Share Posted September 19, 2023 Incredibly friendly shareholder management. Link to comment Share on other sites More sharing options...
Vish_ram Posted September 19, 2023 Share Posted September 19, 2023 MUSA is a great compounder and does buyback. Link to comment Share on other sites More sharing options...
Spekulatius Posted September 19, 2023 Share Posted September 19, 2023 $DFS is one I am buying now, even though they are not buying back shares right now, due to regulatory overhang. They are down to 253M shares, which is less than half what they had a decade ago: Link to comment Share on other sites More sharing options...
Sweet Posted September 19, 2023 Share Posted September 19, 2023 19 minutes ago, Spekulatius said: $DFS is one I am buying now, even though they are not buying back shares right now, due to regulatory overhang. They are down to 253M shares, which is less than half what they had a decade ago: That’s crazy and the PE is 6. These financial firms are just soo complicated that I’ve no idea how to play them. Link to comment Share on other sites More sharing options...
no_free_lunch Posted September 19, 2023 Share Posted September 19, 2023 On 7/22/2023 at 5:43 AM, Sweet said: How is this trading at a PE of 6? What’s the bad news story? I believe there are concerns that car prices peaked and will fall due to higher interest rates. Car loans are now 8-9% and people are already levered up. That said, it seems priced in and the company's record speaks for itself. Link to comment Share on other sites More sharing options...
Spekulatius Posted September 19, 2023 Share Posted September 19, 2023 (edited) 12 minutes ago, no_free_lunch said: I believe there are concerns that car prices peaked and will fall due to higher interest rates. Car loans are now 8-9% and people are already levered up. That said, it seems priced in and the company's record speaks for itself. $DFS does not do car loans. I think you are referring to $COF. $DFS is a very simple business - i hope they dump the student loan business as they seem to be contemplating - it has less return and there are a lot of regulatory issues. What people missing with these cannibals is that for a cannibal to do their work (buying back huge chunks of their own shares), they need to have a low multiple. A 5x PE gives you a 20% earnings yield, which means you can buy back 20% of the outstanding (assuming no re-investment) while with a 20x PE, the company can buy back 5%. That's why the $JXN, $DFS or $BTU and similar cheap stocks are better cannibals now than $AZO. Edited September 19, 2023 by Spekulatius Link to comment Share on other sites More sharing options...
FCharlie Posted September 19, 2023 Share Posted September 19, 2023 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" Link to comment Share on other sites More sharing options...
FCharlie Posted September 19, 2023 Share Posted September 19, 2023 9 minutes ago, Spekulatius said: $DFS does not do car loans. I think you are referring to $COF. I believe they were referring to AutoNation Link to comment Share on other sites More sharing options...
no_free_lunch Posted September 19, 2023 Share Posted September 19, 2023 (edited) 13 minutes ago, Spekulatius said: $DFS does not do car loans. I think you are referring to $COF. $DFS is a very simple business - i hope they dump the student loan business as they seem to be contemplating - it has less return and there are a lot of regulatory issues. What people missing with these cannibals is that for a cannibal to do their work (buying back huge chunks of their own shares), they need to have a low multiple. A 5x PE gives you a 20% earnings yield, which means you can buy back 20% of the outstanding (assuming no re-investment) while with a 20x PE, the company can buy back 5%. That's why the $JXN, $DFS or $BTU and similar cheap stocks are better cannibals now than $AZO. No sir, I was referring to AutoNation, mentioned earlier in the thread. I can see how without a reference that would be confusing. With $DFS, similar story though to AutoNation in that you have to worry about an over leveraged consumer in a high interest rate environment. I guess this is where the cannibal factor really helps out. Edited September 19, 2023 by no_free_lunch Link to comment Share on other sites More sharing options...
DooDiligence Posted September 19, 2023 Share Posted September 19, 2023 Shittybank's been no schlacker on buybacks. Link to comment Share on other sites More sharing options...
FCharlie Posted September 19, 2023 Share Posted September 19, 2023 1 hour ago, DooDiligence said: Shittybank's been no schlacker on buybacks. 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. Link to comment Share on other sites More sharing options...
changegonnacome Posted September 19, 2023 Share Posted September 19, 2023 Cutting your shares outstanding by 50% in six years is pretty impressive for LBTYK....now not a perfect buyback....in the sense that they liquitated big chunks of the FCF in the business in sales.......so the s/o shrinking against stable or growing FCF base started to occur around 2019......so they've dropped s/o by about 30% on the stabilized/growing FCF business in the last three years Link to comment Share on other sites More sharing options...
DooDiligence Posted September 19, 2023 Share Posted September 19, 2023 22 minutes ago, FCharlie said: 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. Stop it. You're gonna make me buy more. Link to comment Share on other sites More sharing options...
Xerxes Posted September 20, 2023 Share Posted September 20, 2023 For those interested, the ChitChat Podcast run 3 episodes in late summer looking at three cannibals. AutoZone Lowe’s Discover Financial. Link to comment Share on other sites More sharing options...
UK Posted September 20, 2023 Share Posted September 20, 2023 5 hours ago, Xerxes said: For those interested, the ChitChat Podcast run 3 episodes in late summer looking at three cannibals. AutoZone Lowe’s Discover Financial. Thanks. Is it this one: https://youtu.be/gpxl2exX9uY?si=FpD6A8ecxjI61bQS ? Link to comment Share on other sites More sharing options...
Xerxes Posted September 20, 2023 Share Posted September 20, 2023 4 hours ago, UK said: Thanks. Is it this one: https://youtu.be/gpxl2exX9uY?si=FpD6A8ecxjI61bQS ? yes sir. That is the one Link to comment Share on other sites More sharing options...
Spekulatius Posted September 20, 2023 Share Posted September 20, 2023 10 hours ago, Xerxes said: For those interested, the ChitChat Podcast run 3 episodes in late summer looking at three cannibals. AutoZone Lowe’s Discover Financial. I listened to the Discover episode - it wasn't very good and I think they got the business wrong. These Chit chat guys are not very good analysts and paint these business in very broad strokes. I personally think you can find better work (Deep dives) elsewhere and you are wasting your time listening to them. The name says it all - it's chit chat. Link to comment Share on other sites More sharing options...
Xerxes Posted September 20, 2023 Share Posted September 20, 2023 4 hours ago, Spekulatius said: I listened to the Discover episode - it wasn't very good and I think they got the business wrong. These Chit chat guys are not very good analysts and paint these business in very broad strokes. I personally think you can find better work (Deep dives) elsewhere and you are wasting your time listening to them. The name says it all - it's chit chat. thanks Spek I actually didn’t listen to Discover but did enjoy their take AutoZone Link to comment Share on other sites More sharing options...
Spekulatius Posted September 20, 2023 Share Posted September 20, 2023 4 minutes ago, Xerxes said: thanks Spek I actually didn’t listen to Discover but did enjoy their take AutoZone I have not listened to Chitchat AZO podcast, but you likely get better info here (Acquired Podcast): https://podcasts.apple.com/be/podcast/autozone-exemplary-capital-allocation/id1559120677?i=1000542928430 Link to comment Share on other sites More sharing options...
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