Major Buybacks This Week (CCOI, FOSL, HIG, KALU, OSG, URI, UTX)
As we have pointed out over and over, it appears that buyback announcements are on the decline in a serious way as far as “new buyback plans” being announced. Ultimately we believe that the buyback paces coming to a crawl is for several factors, with the main issues being the need of cash and the embedded insurance policy this gives companies who want to shore up their capital during a weak economy. We did not count the smaller buyback announcements, but these are the larger ones we saw this week (alphabetically rather than chronologically):
Cogent Communication (NASDAQ: CCOI) completed its prior plan and added another $50 million to its buyback machine. The market cap is about $682 million.
Fossil Inc. (NASDAQ: FOSL) announced that it would repurchase some 2 million shares, or roughly 3% of its shares outstanding.
Hartford Financial Services (NYSE: HIG) added $1 Billion to its prior plan, and its market cap is nearly $23 Billion.
Kaiser Aluminum Corp. (NASDAQ: KALU) is one of the old ones that would be easy to overlook or forget about. But the company raised its dividend and announced a $75 million share repurchase program. This is only about 1.1 to 1.2 million shares, but when you compare it to the $1.3 Billion market cap and the 390,000 share average daily volume it large on a percentage basis.
Overseas Shipholding (NYSE: OSG) replaced its prior buyback plan with a $250 million stock buyback announcement, and it raised its dividend too. This represents more than 3 million shares at current prices and compares to about a $2.4 Billion market cap.
The big kahuna buyback came from United Rentals, Inc. (NYSE: URI) announced it was doing a swap and buyback of some 27.16 million shares. This represents close to 31% of its entire outstanding share count.
United Technologies (NYSE: UTX) was perhaps the largest buyback from the largest company this week. The company announced it would buy back up to 60 million shares as a replacement to its prior plan. Based on a near-$70 price, this implies a sum of up to $4.2 Billion if prices remained static. This has roughly 973 million shares outstanding.
Jon C. Ogg
June 13, 2008