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:
- When buybacks go bad.
- Talking capital allocation with Sardar Biglari.
- Speaking of which, has Eddie Lampert lost his touch?
