In a terrific article back in February, Fool Sham Gad outlined the power of share buybacks to create value. He pointed to NVR (NYSE: NVR ) and Burlington Northern Santa Fe (NYSE: BNI ) as two canny capital allocators. I'd like to regale you with a tale of another regal repurchaser.
With a name like Loews (NYSE: LTR ) , it would be a bit ironic for this conglomerate to botch the timing of its share repurchases. Fortunately, Loews knows how to buy low. The company, which has a stake in businesses ranging from Altria (NYSE: MO ) competitor Lorillard to Boardwalk Pipeline Partners (NYSE: BWP ) to oil and gas contract driller Diamond Offshore (NYSE: DO ) , has been perfecting the art of the buyback for decades.
After explaining their share repurchase philosophy in this year's letter to shareholders, Loews' management dropped the following bomb:
During each of the 1970s, 1980s and 1990s, we repurchased between 25 and 35 percent of our common shares that had been outstanding at the decade's start. As a result, there were 530 million shares of Loews common stock outstanding at year-end 2007, compared with 1.3 billion split-adjusted shares in 1971.
It's easy enough finding a company with fewer shares outstanding than a few years prior. But a near-60% reduction in the share count over 36 years? This is Hall of Fame material.
Critics may gripe about Loews' "conglomerate discount," but think about the salutary effect of such a situation. If you're committed to repurchasing your shares over the decades, what better way to guarantee getting a good price than to maintain a corporate structure that invites mispricing?