So you can invest in your existing operations, you can buy other companies, you can pay down debt, you could pay a dividend, and you could repurchase your shares. That's it. So over long periods of time, the decisions CEOs make across those alternatives have an enormous impact on per share values.
So all I care about is that it gets implemented when you say it's going to, and it works out great. Share repurchases . Tweedy, Browne looks at insider buying in their five points of what works in investing.
and want to understand what it is that they own, because Warren has said that he would like to always buy shares of Berkshire at the right price. Berkshire would love to repurchase its shares. The trouble is that Warren doesn't want to buy from someone who's uninformed about its worth.
And so, occasionally, that mindset would give them conviction around some sort of an action. It could be stock repurchase , a large acquisition, or a large divestiture. And when they had that, they were prepared to move forward because they, themselves, had the conviction coming out of their own thinking,
So buyback. So in that second period, the last dozen years when he bought in 90% of his shares, he had an approach to that that is wildly different than the way most public companies repurchase shares today. Corporate America, as a group, is a completely ineffective repurchaser of its shares.
and 100y year bond issues okay and fixed income there are two ways to increase finance growth in many cases it's been used to repurchase shares it's been used to issue special
So they were shielded from any capital gains tax so that he was able to distribute a lot of proceeds directly out to shareholders in a tax advantaged fashion. And he used the balance of the excess cash to repurchase 30% of shares. So the net of all that was just extraordinary value creation for the shareholders, but in a situation where the company itself, by any metric, revenues, cash flow,
If you look at what Singleton did and what the other CEOs in the book did when they repurchased shares, it was a very, very different approach. They went long periods of time without doing anything and then they would repurchase large chunks of stock when they felt it was inexpensive. Singleton did that through tender offers, which is unusual, but that was his method.
Instead, he'd focused on optimizing his existing businesses and then he began a pioneering program of repurchasing his shares. And over the next dozen years, he repurchased 90% of his shares outstanding. So he showed this amazing to sort of pivot it as the opportunities presented themselves and the result was this extraordinary return over a 28
we don't have to worry about it. And in this case, we thought that meant having a willingness to repurchase shares.
them and I made great profits for them, at a point that I become needy, they should find some way of repaying me with something. And I think that's just a step that may happen because loyalty, I mean repurchase is all that makes a profit. What makes a profit is if somebody buys a brand and continues to buy it they're profitable.
different than the way most public companies repurchase shares today. Corporate America, as a group, is a completely ineffective repurchaser of its shares. So last year, 2014, corporate America set the record for most capital allocated to share buybacks
And not surprisingly, that approach rarely produces interesting returns. If you look at what Singleton did and what the other CEOs in the book did when they repurchased shares, it was a very, very different approach. They went long periods of time without doing anything and then they would repurchase large chunks of stock when they felt it was inexpensive.
He fired his business development team, the group that was going out and finding acquisitions for him. Instead, he'd focused on optimizing his existing businesses and then he began a pioneering program of repurchasing his shares. And over the next dozen years, he repurchased 90% of his shares outstanding.