Introduction
My thesis is that Booking Holdings (NASDAQ:BKNG) has been smart about increasing value for long term shareholders by buying back large amounts of stock in recent periods, especially the first part of 2019.
Filings show that from May 2, 2018 to May 2, 2019 the outstanding shares have decreased by more than 11% because of buybacks:
Shares Date Source
48,174,965 May 2, 2018 1Q18 10-Q
47,472,026 Aug 1, 2018 2Q18 10-Q
46,329,586 Oct 29, 2018 3Q18 10-Q
45,012,725 Feb 20, 2019 2018 10-K
43,291,345 May 2, 2019 1Q19 10-Q
Price Is Important
Suppose you and I own a business with a third person. The business is worth $3 million in aggregate and we all own 1/3rd. If the third person wants us to buy him out at $1.3 million then we won't do it. On the other hand if he wants us to buy him out at $700 thousand then we'll likely try to figure out a way to get it done such that our individual ownership goes from 1/3rd to 1/2. It is the same concept with publicly traded companies. Apart from offsetting stock based compensation, companies that buy back the same amount of shares each year despite price fluctuations aren't doing their stockholders any favors. The companies that buy opportunistically when the price makes sense are the ones that maximize shareholder value and this is well explained in The Outsiders by William Thorndike.
Looking at the last four periods, we see that Booking Holdings has been opportunistic when the price makes sense. When the stock fell to an average of $1,764.07 in 1Q19, they repurchased over 1.6 million shares, exceeding the second-largest repurchase count in recent periods by more than 469,000 shares. The “Issuer Purchases Of Equity Securities” section of quarterly filings breaks this down by showing the number of shares bought back in each
