Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Behold, a Buyback Baron

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?

Loews is rated four out of five stars in Motley Fool CAPS. Join me in cozying up to the conglomerate by rating it outperform right here.

Further Foolishness:

Fool contributor Toby Shute doesn't have a position in any company mentioned. The Motley Fool's disclosure policy always takes the high road.

Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 650981, ~/Articles/ArticleHandler.aspx, 10/23/2016 10:45:08 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

2/12/2010 4:01 PM
BNI.DL $100.21 Down +0.00 +0.00%
Burlington Norther… CAPS Rating: *****
BWP $16.86 Down -0.12 -0.71%
Boardwalk Pipeline… CAPS Rating: ****
DO $17.40 Down -0.50 -2.79%
Diamond Offshore D… CAPS Rating: **
MO $63.70 Up +1.85 +2.99%
Altria Group CAPS Rating: ****