In July, when I last wrote about biopharmaceutical company and former Motley Fool Hidden Gems recommendation QLT (NASDAQ:QLTI), the stock was sitting at $7 a share. Today, the stock is hovering at $7.90 -- a nearly 13% gain in less than three months for those who didn't listen to me.

The impetus has been the company's Dutch auction, in which it repurchased $104 million worth of shares at $8 each. After the shares are retired, the share count will be reduced by nearly 15%. For the year, QLT has bought back nearly 19% of its outstanding shares.

In the second quarter, QLT's cash and equivalents increased by $15 million to $450 million. After the share repurchase, the company will have roughly $350 million in the bank to play with. I'd still like to see QLT do something more imaginative with its cash: The Dutch auction and share repurchases seem to have been the safe way to spend the company's money.

In that quarter, QLT's revenues declined 20% year over year to $48 million primarily because revenues for the company's leading drug for macular degeneration, Visudyne, were down 29%. Before the Dutch auction, the company was estimating earnings of $0.30 to $0.39 a share for 2006, which would give it a P/E ratio of around 23 for the year.

As long as QLT can generate lots of cash from its declining assets, it will remain a possible buyout candidate for other companies or private investors. On this front, QLT has acknowledged receiving buyout offers in the past. I hate to speculate, but it's definitely possible that the company is reducing its share count to make it more attractive as an acquisition or buyout candidate.

Savvy investors who bought near QLT's low of $5.93 for the year are sitting on gains of more than 30%. Not a bad return for those brave enough to invest in a company with multiple competitive threats and no meaningful drug pipeline. Despite my dislike for investing in the company, QLT might be one of those fabled Benjamin Graham "cigar-butt" investments: companies with declining revenues that are still throwing off gobs of cash all the way down.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. He welcomes your feedback . The Fool has a disclosure policy .