Investors love stock buyback plans. Still, not all share repurchases are created equal. Some simply offset dilution from employee stock options and acquisitions. Other share buybacks, the ones most loved by shareholders, are meant to shrink the number of shares outstanding.
24/7 Wall St. tracked three standout buyback announcements from Monday. These might not seem massive on the surface, but two of the three plans are quite substantial versus their market caps.
Green Dot Corp. (NYSE: GDOT) has authorized the repurchase of up to $150 million of its common stock. These share repurchases can be on the open market or through privately negotiated transactions. Green Dot’s market cap was $792 million at the close.
Green Dot shares rose sharply after the news, rising by 27% to $19.56 in the after-hours, but the big part of that pop came from a five-year renewal agreement with Wal-Mart in which it will continue to serve as the program manager and issuing bank for the Wal-Mart MoneyCards in the prepaid and reloadable debit card segment. The initial term of Green Dot’s new agreement is for five years, with an effective start date of May 1, 2015. The company also said in its release that this new deal will replace the current agreement, which was set to have expired at the end of 2015.
Starwood Property Trust
Starwood Property Trust Inc. (NYSE: STWD) announced that it has authorized a $200 million increase and one-year extension to its share repurchase program, which now gives it the ability to purchase up to $450 million of its outstanding common shares and convertible notes over a period of one year, ending on June 22, 2016.
Starwood Property Trust said that these repurchases will be made either on the open market or in privately negotiated transactions. Starwood Property Trust has a market cap of $5.4 billion. As a reminder, there is more than one “Starwood” out there. Starwood Property Trust is an affiliate of the private investment firm Starwood Capital Group, which is said to be the largest commercial mortgage real estate investment trust in the United States.
Zumiez Inc. (NASDAQ: ZUMZ) saw its shares rise 3.7% to $27.29 after an SEC filing showed that the company has approved the repurchase of up to $50 million in common stock on the open market at prevailing market prices.
Zumiez showed that this new repurchase program is expected to continue through the fiscal year 2015, but it also supersedes all previously approved and authorized stock repurchase programs. The company’s prior $30 million previously approved buyback had seen some $27.7 million spent to repurchase roughly 1 million shares. Zumiez has a market cap of almost $800 million.