In a terrific article back in February, Fool Sham Gad outlined the power of share buybacks to create value. He pointed to NVR
With a name like Loews
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?
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