BUYBACKS

“If you do it at the right price, there’s nothing better than buying in your own business.” Warren Buffett

“Repurchases - is sensible [allocation of capital] for a company when its shares sell at a meaningful discount to conservatively calculated intrinsic value. Indeed, disciplined repurchases are the surest way to use funds intelligently. It’s hard to go wrong when you’re buying dollar bills for 80c or less. But never forget: In repurchase decisions: price is all important. Value is destroyed when purchases are made above intrinsic value.” Warren Buffett

“Analysts tend to be cheer-leaders for corporate re-purchase programs. In my view, these programs only make sense under one condition – the company is buying back shares that are significantly under-valued. Most management teams have demonstrated the total inability to understand what their businesses are worth. They’re buying when the stock is up, and have no courage to buy when the stock is down.” Leon Cooperman

"My suggestion: Before even discussing repurchases, a CEO and his or her Board should stand, join hands and in unison declare, 'What is smart at one price is stupid at another'." Warren Buffett

“When the board of directors of a company decides to buy-back its stock in the open market, it may well be a sign that they believe the shares are undervalued and do not adequately reflect the prospect for growth. They feel that the best return on corporate cash is by buying up their own shares in the marketplace.” Christopher Browne

“[CEO] views on share buy-backs can also be highly informative. Very few CEO’s see this as a legitimate investment on par with capital expenditure or M&A decisions, presumably due to an aversion to shrinking any aspect of the company. Many fear that buybacks are an admission that the company has run out of investment ideas. On this subject we like to hear managers justify buybacks based on an internal valuation model, as this can then lead to an interesting discussion about valuation of their business.” Marathon Asset Management

“The companies in which we have our largest investments have all engaged in significant stock repurchases at times when wide discrepancies exist between price and value. As shareholders, we find this encouraging and rewarding.” Warren Buffett

"I look more favourably if a company is doing significant buybacks. That actually adds something to the equation for me. The dividends particularly are not of interest." Mohnish Pabrai

“The only reason we’ll buy in stock is because we think it’s cheap. That is not standard practice in corporate America at all. In fact, corporate America, to some extent, buys in their stock more aggressively when it’s high than when it’s low. But they may have some equation in their mind that escapes my reasoning power.” Warren Buffett

“At the core of their [the Outsider CEO’s ] shared worldview was the belief that the primary goal for any CEO was to optimize long term value per share, not organizational growth.. This may seem like an obvious objective, however, in American business, there is a deeply ingrained urge to get bigger. Larger companies get more attention in the press, the executives of those companies tend to earn higher salaries and are more likely to be asked to join prestigious boards. As a result, it is very rare to see a company pro-actively shrink itself. And yet virtually all of these CEO’s shrank their share bases significantly through repurchases.” William Thorndike [The Outsider CEO’s]

“I’m amazed at how many CFOs don’t truly understand the long-term sustainability and value creation of stock buybacks.” Lee Ainslie

"Buying back shares is the simplest and best way a company can reward its investors. If a company has faith in its own future, then why shouldn't it invest in itself, just as the shareholders do?" Peter Lynch

“Our preference is for companies to employ cash for buybacks because we believe every stock we own is under-valued.” Andrew Wellington

"Pay close attention to the cannibals – the businesses that are eating themselves by buying back their stock." Charlie Munger

“As long as you’re doing something that doesn’t harm the value of the company, accelerating the benefits to shareholders is exactly what creating value is about. The best example, of course, is buying back stock. If you have a great long-term story and a value creating plan ahead of you, why would you wait and buy back stock after the market fully reflects the value? From a capital allocation standpoint, you want to buy back stock ahead of all that.” Scott Ostfeld

“Buying-in shares can be a smart tactic if a company is flush with cash and the stock is in the tank. As Warren Buffett once noted, who wouldn’t jump at the chance to buy out his partners as 50 cents in the dollar? And of course, as the number of shares being traded shrinks, the percentage of a controlling stake expands. Buying-in shares is another thing entirely, however, when shares are selling at or near historic highs and priced at many times earnings. Worse is for a company to take on debt in the process, as some companies have done to make purchases, because when the stock falls, the company is left with increased debt and diminished capital.” Leon Levy

“A manager who consistently turns his back on repurchases, when these clearly are in the interests of owners, reveals more than he knows of his motivations. No matter how often or how eloquently he mouths some public relations-inspired phrase such as “maximizing shareholder wealth” (this season’s favorite), the market correctly discounts assets lodged with him. His heart is not listening to his mouth - and, after a while, neither will the market.” Warren Buffett

“What is universally absent from press and analytical commentary on share buybacks is any discussion of the price at which they are executed, the returns which this implies for the remaining shareholders who are in effect funding the repurchase, and whether they therefore create or destroy value… Share buybacks only create value if the shares repurchased are trading below intrinsic value and there is no better use for the cash which would generate a higher return.” Terry Smith

"When your business is not doing well from a fundamental perspective, the last thing you're supposed to do is buy back stock." Marc Cohodes

“We only believe in repurchasing shares when we can do so at a significant discount from intrinsic value. Some companies talk about — Coca-Cola does — they talk about buying in shares to cover options. That actually isn’t the best reason to buy in shares. I mean, the stock could be overpriced, and even though you issued on options, you shouldn’t be buying it in. If you buy shares — if you buy a dollar bill for 90 cents, you’re doing your shareholders a favor. And if you buy it for $1.10, you are doing them no favor at all.” Warren Buffett

"It is generally the case that most managements, and indeed whole industries, engage in pro-cyclical behaviour. It is greatly dispiriting to see companies repeatedly buying back their shares as the cycle peaks, only to raise fresh capital at the trough. Shareholders invariably lose out in the process.” Marathon Asset Management

"If you look at the history of share repurchases, you know, it falls off like crazy when stocks are cheap and it tends to goes up dramatically when stocks get fully priced." Warren Buffett

“It seems to me we always used to hate companies that would buy other companies at the top of the market, how’s it any different from buying your own shares at the top of the market.” Russell Clark

"If you’re repurchasing shares above a rationally calculated intrinsic value, you are harming your shareholders, just as if you issue shares beneath that figure, you are harming your shareholders." Warren Buffett

"Boards that authorise share-repurchase initiatives at market prices below what the businesses are intrinsically worth per share (without foregoing investment in even more compelling growth opportunities and with due regard for the financial security of the remaining shareholders) are clearly putting the shareholder's interest high on the priority list." Frank Martin

"I urge you, if you’re trying to decide on the wisdom of repurchases, or of share issuances, that you don’t think in terms of book value. You don’t think in terms of specific P/Es. You don’t think in terms of any little model. But you think in terms of what would you really, A, pick businesses you can understand and, then, think what you really would pay to be in those businesses. And that’s what counts over time, is whether the repurchases are made at a discount from that figure." Warren Buffett

“Do they [management] have an intelligent read on intrinsic value and will they consistently buy back shares at attractive discounts to that intrinsic value? That’s another key way to determine whether they are thinking like owners.” Peter Keefe

“If a company buys in stock at X instead of 2X our ownership goes up dramatically more. We don’t like companies buying in their stock just because they are doing it, we like them buying the stock below what we think it’s worth. At that point we’re making money without laying out a dollar of our own money.” Warren Buffett

“When i was in the leveraged buyout (LBO) business, when we explained to prospective management teams, we told them there were three ways to increase value in their equity stakes: i) increase EBITDA, ii) pay down debt, and iii) get the market to apply a higher multiple of the company’s EBITDA than paid initially in the LBO transaction. With public companies, the above three value-creating methodologies still apply, with the addition of an important fourth: Through active capital management, repurchase shares at less than their intrinsic value.” Ted Weschler

“The math isn’t complicated: When the share count goes down, your interest in our many businesses goes up. Every small bit helps if repurchases are made at value-accretive prices. Just as surely, when a company overpays for repurchases, the continuing shareholders lose. At such times, gains flow only to the selling shareholders and to the friendly, but expensive, investment banker who recommended the foolish purchases. Gains from value-accretive repurchases, it should be emphasized, benefit all owners – in every respect. Imagine, if you will, three fully-informed shareholders of a local auto dealership, one of whom manages the business. Imagine, further, that one of the passive owners wishes to sell his interest back to the company at a price attractive to the two continuing shareholders. When completed, has this transaction harmed anyone? Is the manager somehow favored over the continuing passive owners? Has the public been hurt?When you are told that all repurchases are harmful to shareholders or to the country, or particularly beneficial to CEOs, you are listening to either an economic illiterate or a silver-tongued demagogue (characters that are not mutually exclusive).” Warren Buffett