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Loews Coportation: The Perfect Exemple Of The Power Of Buyback Programs Over Time !

|Includes: Loews Corporation (L), VR, WJAFF

Simple, quicly and academic exemple

Graphics are more valuable to demonstrate how the buyback programs are efficient in a long term approach.

If you look at this document, you see that the company reduced its share from 1.3 Billion (1971) to 357 Million today. That's meaning, a reduction of 72,5%! Amazing, no?

Buybacks since 1971

Source: Presentation Q3 2015 earnings

What about the impacts on the stock?

A very quick view on the return to shareholder graphic is interesting...

Source: Presentation Q3 2015 earnings

If you are always not convinced, all you need to know is a couple of numbers:

  • an average compoinf annual returns of 17% for 50 years
  • or a $2,907 gain for each $1 invested

The aim is not to persuade you to invest in Loews ($L) stock, but to keep in mind, that good buybacks create a lot of value for shareholders. Only if companies buyback their own shares:

(1) at a discounted price and,

(2) with an aim to cancel them

If these two conditions are validated, you can be sure the company will create a lot of value for the investors.

For example, WestJet Airlines ($WJAFF) or Validus Holdings ($VR) are on the raod to outperforming the market.

More experiences and exemples here:

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in WJAFF, VR over the next 72 hours.