Tags
intrinsic value, Margin of Safety, NAV, Price/Sales, share buyback, Total Produce, Treasury Shares, valuestockinquisition
Btw Happy 11.11 11-11-11! I’m amused to see the media highlighting all the weddings today, more romantic than induced labor I guess…! Yes, lots of babies being born today – and if you’re born in Korea today your SS number begins with 111111… It’s also Nigel Tufnel Day – c’mon turn up your stereo/ipod to 11!!
valuestockinquisition highlighted his distaste for share buybacks here and here. Ideally, I’m a supporter of share buybacks, but in reality I have very mixed feelings about them… The quality of stock/share buyback analysis in most companies is atrocious – throw away your corporate finance textbooks! I don’t think I’ve ever met anybody in a corporate environment who could come up with (or discuss coherently) a fundamental Intrinsic Value for their company stock. This is a tremendous handicap for any strategic decision making, and of course for share buybacks. In most companies, the analysis goes something like this: Do we have spare Cash/Debt for a buyback? Are we feeling good about the company, the share price, ourselves? What’s the EPS impact? This is the final trigger for any share buyback, let’s take a look at the math:
