Investing

Major Buybacks This Week (CCOI, FOSL, HIG, KALU, OSG, URI, UTX)

Douglas A. McIntyre

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