Friday , August 12 2022

These three companies are buying back shares and score a lot of top & # 39; investment strategies


The companies started this year with & # 39; much cash, thanks to major cuts & # 39; tax, and have that money to work in the market.

Specifically, they were buying their own stock.

Even Berkshire Hathaway & # 39; Warren Buffett joined the crowd, and recently announced it had achieved nearly US $ 1 billion & # 39; shares in & # 39; recent months.

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By & # 39; November, American companies bought record & # 39; US $ 957 billion of & # 39; own stock and were b & # 39; step to surpass the mark of & # 39; US $ 1 trillion for the year, according to TrimTabs Investment Research based in & # 39; San Francisco, although the activity is similar to last weeks & # 39; December.

The repurchase & # 39; & # 39 can share; be a bullish sign. Companies that cut their own shares packages seem to demonstrate that they are undervalued and that their businesses are operating well enough to project future growth.

Part of the tax revision at the end of & # 39; 2017 was an incentive for companies & # 39; US to bring money stashed abroad, and this is a major reason for the boom in buying back & # 39; this year. It is a simple and relatively quick way & # 39; & # 39 placement; Cash newly repatriated to work.

Apple, for example, said earlier this year that it will buy back the breakup of & # 39; United States & # 39; $ 100 billion & # 39; its shares, the largest in history. Cisco announced plans to buy USD25 billion, while Wells Fargo revealed program & # 39; US $ 22.6 billion.

For Berkshire Hathaway, the move to buy US $ 925 million of its shares in the open market was greeted with & # 39; ilħeġ by investors, who pushed shares B to up 5 percent after it issued News.

Apart from the purchase of & # 39; stocks, companies can use extra cash sitting on their balance sheets to pay debt, as AT & T promised to make over the next year or so while still pay its dividend. Or they may use to invest in their businesses, how to make the Amazon by raising wages and open two new headquarters in & # 39; Windows and New York. They can also pay directly to shareholders in the form of & # 39; dividend.

Acquisitions are another way to use cash, and there were nearly three dozen megadeals of & # 39; more than $ 10 US billion announced in the US during the first half of the year, according to Dealogic, firm & # 39; financial analysis based in U.K.

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But the back has the added benefit of reducing the total number of shares, which can & # 39; increase the profit share with & # 39; share (EPS). Some have argued that this is a temptation for companies to try to juice their numbers or boost EPS to benefit executives within & # 39; bonus. And indeed not improve the economy, which was to be the idea behind the tax cuts.

There are more dark side to consider: The companies are using their extra cash to buy back their stock because they do not see other helpful hints for money. When companies no longer profitable ideas, tend to return money to their owners, the shareholders.

Berkshire changed its rules about buying the new earlier this year, giving Mr Buffett and his long Lieutenant Charles Munger more freedom to decide whether and Jimmi yet come time to buy. Sure, Berkshire coincided to find another use for its cash. Retired from some ideas & # 39; the acquisition last year, in & # 39; one case after the outbreak of war & # 39; offerings, and did not find many companies to buy not much valued.

Mr. Buffett has pushed the idea to buy assets when trades below its intrinsic value, which is a production estimate of future cash & # 39; discounted business today. And the intrinsic value & # 39; Berkshire has grown more than the value of his book in & # 39; in recent years.

Investors took some comfort when buying back its shares, Berkshire was making signal its readiness to continue & # 39; disciplined about acquisitions and not spend too much on treating only because it had money burning a hole in her pocket.

Perhaps that is the same signal that other companies are giving.

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In Validea, saw set & # 39; model & # 39; pursue investment strategies used by some of the biggest investors, including Mr. Buffett. Here are three companies that are expensive among the companies announced back in last year.

Biogen Inc. (BIIB Q) – This biopharmaceutical company score highly on the models to follow the styles & # 39; Warren Buffett and Peter Lynch, former portfolio manager & # 39; Fidelity. An average return on equity over 10 years & # 39; 22.7 percent. Earlier this year announced a refund & # 39; US $ 3.5 billion. In assessing the current market, approximately 4.5 percent of the company.

Alliance Data Systems Corp. (ADS N) – This stock win on many models to follow Mr. Buffett and Mr. Lynch. The provider of market data and the loyalty program is consistency over the long term gains and high returns on capital and equity. plan also has & # 39; repurchase of & # 39; USD 500 million, which is equivalent to about 4.6 percent of its market ceiling at current prices.

Diamond Hill Investment Group (Q DHIL) – This stock & # 39; good fit miniature models on Buffett and Lynch. The investment advisor and fund manager, announced that reimbursement & # 39; US $ 50 million in & # 39; in September, should rate & # 39; Annual growth & # 39; 10 years & # 39; 13.5 percent and free cash flow b & # 39; her health.

John Reese is chief executive officer & # 39; and Validea Capital, the manager & # 39; & # 39 ETF managed by; actively. Globe Investor has & # 39; & # 39 distribution agreement;, A leading service & # 39; screen Canadian stocks.

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