The Biggest of the Recent Buybacks

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As it turns out, Anadarko Petroleum (NYSE: APC) isn't the only company with the bright idea to buy back its shares as they're dumped by nervous Nellies.

Just this week, we've seen either new or increased repurchase programs from National Fuel Gas (NYSE: NFG), Joy Global (Nasdaq: JOYG), CONSOL Energy (NYSE: CNX), and Foster Wheeler (NYSE: FWLT).

The mother of all buybacks this week, however, was announced by PotashCorp (NYSE: POT) on Thursday evening. After prompt completion of the 5% repurchase plan it had announced in January, not to mention ravenous insider buying, the PotashCorp board has doubled its previous authorization. Fully 10% of shares are going bye-bye, leaving bigger slices of pie for you and me.

Well, not me, because I never got around to grabbing any shares. But maybe you were smarter.

Of course, the size of a buyback doesn't guarantee greatness. AIG (NYSE: AIG) authorized an $8 billion program last year, and look how that's working out. But compared with AIG, PotashCorp occupies a wonderfully transparent line of business -- owning and operating the world's richest deposits of a fertilizer for which farmers have a serious fever. Domestic crop revenue is up two or three times since 2005, generating plenty of cash to pay up for yield-enhancing crop nutrients. Even the recent pullback in corn leaves prices at very attractive levels.

PotashCorp's management is showing terrific capital discipline here. Rather than throwing billions of dollars at a new mine, the company is improving its assets through expansion, while simultaneously reinvesting in itself through repurchases. At a high-single-digit multiple of estimated 2009 earnings, it's hard to see this strategy going wrong.