Public Company Share Repurchase-Cannibals

[Saluki]

I wonder if you can consider adding something to the list of cannibals if they have a big authorization but haven't bought back a lot of stock yet.  Both Olin and Anterix have buybacks authorized for half of their market cap, but you need money to carry that out. 

[Xerxes]

On 2/1/2025 at 7:28 PM, Sweet said:

Nice article - thanks.

 

I do think there are some differences, NVR managed to be capital light, but GM is not.  GM is not getting a large return on invested capital.

 

Do you own GM?  What do you like about apart from the obvious - the obvious being low multiple and potential for continued buy backs?

sorry for late reply. 
I was busy doing my civic duties on the tariff thread. 
 

on GM. I own it. Originally based on the fact that they were selling off and shrinks their global footprint and their investment in developing EV platform, in contrast to Ford. 
 

of course the thesis probably changed with the new administration. 

[Xerxes]

On 2/1/2025 at 7:41 PM, Eng12345 said:

 

The above is what has struck my interest in MGM recently. I have taken a small positon as I get comfortable with it. 

IAC

[KPO]

31 minutes ago, Xerxes said:

IAC

Exactly why I’ve been buying in recent days. 

[Sweet]

1 hour ago, Xerxes said:

sorry for late reply. 
I was busy doing my civic duties on the tariff thread. 
 

on GM. I own it. Originally based on the fact that they were selling off and shrinks their global footprint and their investment in developing EV platform, in contrast to Ford. 
 

of course the thesis probably changed with the new administration. 

You don’t owe me a reply so don’t worry, but thanks for replying  

[KPO]

TOL has repurchased ~50% in the last decade while maintaining a strong balance sheet and not starving the business. 

[Xerxes]

https://investor.gm.com/news-releases/news-release-details/gm-board-approves-new-share-repurchase-plan-including-2-billion

[FCharlie]

1 hour ago, Xerxes said:

https://investor.gm.com/news-releases/news-release-details/gm-board-approves-new-share-repurchase-plan-including-2-billion

With the initial delivery from the ASR, GM will have repurchased 30% of its shares in less than a year and a half. Assuming they complete the entire $6 billion this year that number will be up to 36% in two years.  Current non-GAAP EPS estimates are $11.45 but all things equal, EPS estimates should immediately rise because of this ASR, probably closer to $11.75-$12, putting the non-GAAP P/E on today's purchase price at about 4. Of course these estimates are subject to change due to tariffs but does a dividend increase and a $6 billion buyback sound like a company that is worried about tariffs? Also noteworthy, in the last six years GM has generated over $50 billion of free cash flow, meanwhile today's market cap is $48 billion. 

[Xerxes]

9 hours ago, FCharlie said:

With the initial delivery from the ASR, GM will have repurchased 30% of its shares in less than a year and a half. Assuming they complete the entire $6 billion this year that number will be up to 36% in two years.  Current non-GAAP EPS estimates are $11.45 but all things equal, EPS estimates should immediately rise because of this ASR, probably closer to $11.75-$12, putting the non-GAAP P/E on today's purchase price at about 4. Of course these estimates are subject to change due to tariffs but does a dividend increase and a $6 billion buyback sound like a company that is worried about tariffs? Also noteworthy, in the last six years GM has generated over $50 billion of free cash flow, meanwhile today's market cap is $48 billion. 

 

Thanks Charlie. 

[Sweet]

14 hours ago, FCharlie said:

With the initial delivery from the ASR, GM will have repurchased 30% of its shares in less than a year and a half. Assuming they complete the entire $6 billion this year that number will be up to 36% in two years.  Current non-GAAP EPS estimates are $11.45 but all things equal, EPS estimates should immediately rise because of this ASR, probably closer to $11.75-$12, putting the non-GAAP P/E on today's purchase price at about 4. Of course these estimates are subject to change due to tariffs but does a dividend increase and a $6 billion buyback sound like a company that is worried about tariffs? Also noteworthy, in the last six years GM has generated over $50 billion of free cash flow, meanwhile today's market cap is $48 billion. 

Great information Charlie thanks.

 

It’s very tempting but I feel like the next capex cycle is always around the corner with these companies and they trade deservedly at lower PEs.  There was a five year period not too long ago that they were cashflow negative for example.

 

But they seem to be developing a cannibalism mentality. 

[FCharlie]

6 hours ago, Sweet said:

Great information Charlie thanks.

 

It’s very tempting but I feel like the next capex cycle is always around the corner with these companies and they trade deservedly at lower PEs.  There was a five year period not too long ago that they were cashflow negative for example.

 

But they seem to be developing a cannibalism mentality. 

You may be right about them deserving a low PE. The market certainly disagrees with me, but I'm in the David Einhorn camp that the market is fundamentally broken and the passive bid is just relentlessly being pumped into to the same winners while the losers are permanently abandoned. If this is true, GM is doing the exact right thing and the market is going to allow them to buy 40%, 50%, 60%, hopefully 70% without rerating the stock. This doesn't mean the stock won't go up, in fact, eps estimates for 2025 have risen from $7.60 to $11.45 since they started this aggressive share repurchase strategy. I believe $11.45 will be revised higher because of the $2 billion ASR which should advance over 30 million shares today, taking the share count from 995 million to 965 million.

[This2ShallPass]

On 2/26/2025 at 10:42 AM, FCharlie said:

With the initial delivery from the ASR, GM will have repurchased 30% of its shares in less than a year and a half. Assuming they complete the entire $6 billion this year that number will be up to 36% in two years.

This made me look at GM! In my 30 mins of research, the only question I have come up is on their debt - is GM financial debt non recourse to the parent? I would assume so.

 

They have an EV of ~$65B and ~$12-13B 2025 EPS. Tariffs impact is a big unknown.

[Rainier]

I don’t know anything about this company, but will do some research. Anyone know anything about it? It just came up as I was researching BIRG and came across this guy’s twitter.

 

Irish Continental Group

 

(also, can anyone tell me how to embed a twitter post so it can actually be seen  in the body of my forum post here on cobf?)

Edited March 3, 2025 by Rainier

[influx]

Hi Folks,

 

Do you have any cannibals screeners that you use, free or otherwise (not bloomberg)? I am not an institutional investor.

I did some search and I am yet to check my results and see what's out there.

I am aware I can check company's outstanding shares over time though, say on https://www.macrotrends.net

[Spekulatius]

I posted a Tikr cannibal screen upthread.

 

Edited March 7, 2025 by Spekulatius

[TwoCitiesCapital]

RC Capital 

 

Not a ticker I follow regularly, but is a REIT of sorts that just reduced its dividend and announced a $150 million stock buybacks program. 

 

$150 million is 15-20% of the plunge-adjusted market cap. Supposedly book value of portfolio is ~$10 per share while shares now trade near $5 - so should be accretive. 

 

And they seem serious about it to. Repurchased $40 million in the quarter preceding the dividend/reduction and plunge 

 

Buyback plus plunge in price were enough to interest me. Will take a deeper dive once I find the time - but struck me as the situation we all hope for: a management willing to cut the divvy for buybacks, when it makes sense, a falling stock price to supercharge that accretion. 

Edited March 7, 2025 by TwoCitiesCapital

[KPO]

BBY has bought back ~50% since 2010 and doesn’t seem to be stopping, plus they have a net cash position and a >5% yield, that itself keeps growing. 

[FCharlie]

GM has repurchased 35% of itself since 2023. They just authorized a new $6 billion buyback so by end of 2026 they may be at 40%. So far the valuation has rerated from a laughable 4-5X to a slightly less laughable 7X earnings. They continue to generate around $10 billion of free cash flow per year. I've owned this since 2023, not because I love car companies, but because they are aggressively taking advantage of the fact that the market is broken, that investors don't care about them. Where's the tipping point? The stock is at an all-time high today. My guess is we'll be $100+/share soon. Considering GM was trading in the $20s/share when they began this aggressive capital allocation just two years ago I'm surprised more people aren't noticing or participating, but I guess the longer they don't, the longer this can go on for. 

 

https://investor.gm.com/static-files/36170429-ef23-4ad5-97dd-6a523c3f8deb

 

[Malmqky]

18 minutes ago, FCharlie said:

GM has repurchased 35% of itself since 2023. They just authorized a new $6 billion buyback so by end of 2026 they may be at 40%. So far the valuation has rerated from a laughable 4-5X to a slightly less laughable 7X earnings. They continue to generate around $10 billion of free cash flow per year. I've owned this since 2023, not because I love car companies, but because they are aggressively taking advantage of the fact that the market is broken, that investors don't care about them. Where's the tipping point? The stock is at an all-time high today. My guess is we'll be $100+/share soon. Considering GM was trading in the $20s/share when they began this aggressive capital allocation just two years ago I'm surprised more people aren't noticing or participating, but I guess the longer they don't, the longer this can go on for. 

 

https://investor.gm.com/static-files/36170429-ef23-4ad5-97dd-6a523c3f8deb

 

People (me) hate GM, I bet you make a ton of money off this. The valuation is going to be depressed permanently. Good job, wish Berkshire had gotten into this or GE.

 

Id like to add British American Tobacco and Warrior Met to the list as future share cannibals.  

[gfp]

4 minutes ago, Malmqky said:

People (me) hate GM, I bet you make a ton of money off this. The valuation is going to be depressed permanently. Good job, wish Berkshire had gotten into this or GE.

 

Id like to add British American Tobacco and Warrior Met to the list as future share cannibals.  

 

Berkshire had a decent position in GM and exited in 2023.  Wonder who's position it was

[Sweet]

1 hour ago, FCharlie said:

GM has repurchased 35% of itself since 2023. They just authorized a new $6 billion buyback so by end of 2026 they may be at 40%. So far the valuation has rerated from a laughable 4-5X to a slightly less laughable 7X earnings. They continue to generate around $10 billion of free cash flow per year. I've owned this since 2023, not because I love car companies, but because they are aggressively taking advantage of the fact that the market is broken, that investors don't care about them. Where's the tipping point? The stock is at an all-time high today. My guess is we'll be $100+/share soon. Considering GM was trading in the $20s/share when they began this aggressive capital allocation just two years ago I'm surprised more people aren't noticing or participating, but I guess the longer they don't, the longer this can go on for. 

 

https://investor.gm.com/static-files/36170429-ef23-4ad5-97dd-6a523c3f8deb

 

I remember you posted this and I was sorely tempted to buy.  My sole reason for not entering the position was ‘well it’s GM’.  My logic being they will find some way to screw it up.

[UK]

3 hours ago, gfp said:

 

Berkshire had a decent position in GM and exited in 2023.  Wonder who's position it was

I think it was Ted's.

[Saluki]

By the metric, PayPal and St Joe, 2 board favorites, look good based on 10 year reduction in share count. 

 

https://www.macrotrends.net/stocks/charts/JOE/st-joe/shares-outstanding

 

https://www.macrotrends.net/stocks/charts/PYPL/paypal-holdings/shares-outstanding

 

[Saluki]

Medical Facilities Corp, which I did a post on but don't own, would certainly qualify since it has bought back about 40% of their shares the past few years and has authorization for 10% this year. 

[moatrep]

PVH is buying like crazy and the balance sheet doesn't look that bad. Just no growth, but owners earning yield about 13%. I mean for an small Peter Lynch position, as I don't have any insight. One insider bought at this price, which gives more confidence.

Edited March 12 by moatrep