BUYBACKS

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

“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

“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 Ainslee

"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 Munge

“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 junp 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

"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

"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

“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

"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