8 Buybacks and Dividends Just Too Big to Ignore

NGL Energy Partners

NGL Energy Partners L.P. (NYSE: NGL) may have just started something almost unheard of, even if the size sounds small. The board of directors of its general partner authorized a unit repurchase program, where NGL can spend up to $45 million to repurchase outstanding units, and this is fairly accelerated as the pact is only through March 31, 2016. While NGL has a market cap of $2.3 billion and $45 million does not sound like much, this represents more than 2 million shares at current prices, and is about seven days worth of average trading volume. Trading at $21.81, it has a 52-week range of $21.00 to $43.00.

While NGL is not obligated to spend the capital, it is close to unheard of for a master limited partnership (MLP) to repurchase units. MLPs are generally consumers of capital. Its distribution yield equivalent is also north of 10%. Its quarterly report in August was shown to be another quarter with improved adjusted EBITDA and a continued increase in its distribution to unit holders. The company also said that it was very excited about its slate of internal growth projects to continue delivering growth. NGL further said that it is pursuing certain acquisitions and joint venture opportunities. This MLP has five primary businesses: crude oil logistics, water solutions, liquids, retail propane and refined products and renewables.

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While not exactly announcing a new buyback plan, but what Walt Disney Co. (NYSE: DIS) did was buy shares aggressively after the stock sold off handily. After listening in on the call at a Merrill Lynch conference this week, 24/7 Wall St. was among the first to report that COO Tom Staggs confirmed that Disney was aggressively buying back its stock during and after the selling panic that took place in August and September.

While Disney will continue looking for growth investments, the company also confirmed just how aggressive it wants to be using strong cash flows for returning capital to shareholders. Staggs said that Disney took advantage of buying back stock at “meaningfully lower” prices, and he even said he thought that reaction in the shares had been overdone. We do not know what days Disney bought back stock for an August or September timing, but the company spent a whopping $2.4 billion buying back shares since the sell-off started. That takes the total spent to about $5.6 billion in total buybacks for fiscal 2015 (ending September), and Staggs said that Disney plans to still spend $6 billion to $8 billion in share buybacks in fiscal 2016.

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