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Started By
Message
re: Stock repurchases
Posted on 5/31/11 at 6:10 pm to kfizzle85
Posted on 5/31/11 at 6:10 pm to kfizzle85
quote:
What if Cisco
Our recent discussion has me focused on them for this thread. I think it would be a bad decision by them to buy back their stock. I could see a healthy dividend much like microsoft did a few years back. I think companies should either purchase more assets or increase dividend to investors.
I work for a company that buys back stock but I'm not sure how helpful it is over a dividend payment or purchasing growing assets.
1
Posted on 5/31/11 at 6:15 pm to C
Well if you can buy assets that implies profitable opportunities exist, which is almost always a better option, but I feel like we are generally ruling that out. Dividend is only tricky because of ability to maintain and tax effects. A one off dump like MS did I think is the best thing to do for someone in CSCOs situation.
Posted on 5/31/11 at 6:24 pm to kfizzle85
quote:
A one off dump like MS did I think is the best thing to do for someone in CSCOs situation.
For a short time investment, would a large div payment by CSCO be helpful or would the stock price simply decrease comparative to the size of the div? Or would investors see this as a positive sign that CSCO didn't waste the money on a failing asset?
This post was edited on 5/31/11 at 6:25 pm
Posted on 5/31/11 at 6:33 pm to kfizzle85
Loews corp is another success story for share repurchases - their annual report says they have bought back over 2/3 of their shares over the past 40 years. It seems the holding style type company lends itself to effective buybacks for some reason, maybe because they tend to be undervalued?
Posted on 5/31/11 at 6:42 pm to C
Theoretically it would be priced in ex-div, yeah. Might vary by a little but by and large ghats one part of emh that trends to hold since its pretty straightforward.
Posted on 5/31/11 at 6:50 pm to kfizzle85
Well that's assuming all the pieces are publicly traded right?
Posted on 5/31/11 at 7:01 pm to sneakytiger
Not site what you mean.
Posted on 5/31/11 at 7:23 pm to kfizzle85
quote:
Not site what you mean.
Say what?
Posted on 5/31/11 at 7:27 pm to kfizzle85
Never mind, I think you were saying the ex-div would be priced in. I was talking about valuing a HC using a "sum of the parts" approach, if that makes sense.
Posted on 5/31/11 at 7:36 pm to LSURussian
Its the phone. If only I had an iphone, sigh.
Posted on 5/31/11 at 7:38 pm to sneakytiger
Yeah, if it wasn't publicly traded you'd just do valuation based on comps. That's how most conglomerates are valued anyway.
Posted on 5/31/11 at 7:42 pm to kfizzle85
quote:
Its the phone. If only I had an iphone, sigh.
Ah....understood.
Posted on 5/31/11 at 7:57 pm to LSURussian
My iPhone has been "correcting" words that I spell correctly lately. It is starting to aggravate me.
Posted on 5/31/11 at 8:59 pm to TheHiddenFlask
quote:
My iPhone has been "correcting" words that I spell correctly lately.
Steve Jobs knows what's best. You will lose. Resistance is futile...
Posted on 6/1/11 at 10:33 am to kfizzle85
quote:
No disagreement here. WB is in a unique position though, he just buys whatever he wants. BRK is just a giant investment conglomerate, most ceos would get hammered for that. What if Cisco decided to go buy a distressed european insurer/bank right now, instead of a buyback or whatever? People would freak the f out.
That is the point. How many of the insurance related entities that BRK owns did it start as a de novo entity? I believe the answer is zero, Geico, GenRE, etc were acquired on favorable terms. To THF's question, buying other bolt on companies at distressed prices makes better economic sense than share repurchases. Put it this way, how many CEO's had an established war chest in 2008 in order to capitalize on distressed opps? It's not the first order of business, and some could be skewered for what might be considered risky businesses or assets, but if the assets complement the existing business why not?
Nothings perfect. How many $billions has Sears wasted on repurchases the past 5-years? Why not just pay a one time dividend as I can't envision a bolt on value add for that company off the type of my head.
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