used to have access to Bloomberg which I am sure would offer query for that. I wonder if ChatGPT could solve along lines of "largest percentage decline in diluted shares outstanding over past X years for members of <examined index>"
Insightful article and always enjoy the thoughts that you provide. As for buybacks just a couple of thoughts:
- have to differentiate between announced buybacks and actual execution of repurchase program
- key metric is to measure "shrinkage" in diluted shares outstanding. See lots of bad behavior where buyback is merely covering management dilution due to compensation
Always like to look at average level of share repurchase price since it can provide insight on valuation if company is thoughtful in their repurchase plan
Thank you for the well-written and informative piece!
I am totally in favor of returning value to shareholders via share repurchases. However, my preference leans toward dividends. If the management can do both, it's even better. Over the last 13 years I have steadily built a portfolio of well established businesses that pay out a portion of their profits as dividends. Each year, most of the companies increase the size of their dividends. As I matter of fact, the only stock I own that doesn't pay me is BRK.B. My plan has always been to gradually transition from payroll funds to dividend income as means to cover my expenses and achieve financial freedom. Having a multimillion dollar portfolio is fine and dandy, but if I lack the cash flow into my bank account, I need to start selling a certain number of shares in order to live from the proceeds. Because I am still in my forties, I don't view this strategy is prudent. At the same time, regular and ever increasing dividends, combined with additional proceeds from option strategies, help me sleep better at night, provide "real" and not just paper returns and since all my holdings are in an RRSP or a TFSA accounts (for Canadian investors), I don't have to pay any dividend tax.
All in all, if executed at the right price and with the right intention, share repurchases can be a great thing for shareholders. Unfortunately, this is not the case with many corporations. There are pros and cons to dividends and share buy backs, so it's a personal choice based on the financial situation and goals of the investor.
used to have access to Bloomberg which I am sure would offer query for that. I wonder if ChatGPT could solve along lines of "largest percentage decline in diluted shares outstanding over past X years for members of <examined index>"
thanks. It's on my lost to examine. Have seen some fairly interesting uses of the capability already.
Thanks for another great article... really enjoy the thought experiments to highlight some of the potential benefits.
Wonder how a blend of some of your top or favorite differentiated strategies would perform against benchmark indices!
Insightful letter this week-- appreciate it. Thank you.
I have been thinking about this recently also. Great writing!
Insightful article and always enjoy the thoughts that you provide. As for buybacks just a couple of thoughts:
- have to differentiate between announced buybacks and actual execution of repurchase program
- key metric is to measure "shrinkage" in diluted shares outstanding. See lots of bad behavior where buyback is merely covering management dilution due to compensation
Always like to look at average level of share repurchase price since it can provide insight on valuation if company is thoughtful in their repurchase plan
Thank you for the well-written and informative piece!
I am totally in favor of returning value to shareholders via share repurchases. However, my preference leans toward dividends. If the management can do both, it's even better. Over the last 13 years I have steadily built a portfolio of well established businesses that pay out a portion of their profits as dividends. Each year, most of the companies increase the size of their dividends. As I matter of fact, the only stock I own that doesn't pay me is BRK.B. My plan has always been to gradually transition from payroll funds to dividend income as means to cover my expenses and achieve financial freedom. Having a multimillion dollar portfolio is fine and dandy, but if I lack the cash flow into my bank account, I need to start selling a certain number of shares in order to live from the proceeds. Because I am still in my forties, I don't view this strategy is prudent. At the same time, regular and ever increasing dividends, combined with additional proceeds from option strategies, help me sleep better at night, provide "real" and not just paper returns and since all my holdings are in an RRSP or a TFSA accounts (for Canadian investors), I don't have to pay any dividend tax.
All in all, if executed at the right price and with the right intention, share repurchases can be a great thing for shareholders. Unfortunately, this is not the case with many corporations. There are pros and cons to dividends and share buy backs, so it's a personal choice based on the financial situation and goals of the investor.