I appreciated Jeff's comments about how he and Leah approach M&A deals as if they're writing a personal check. However, if applied to share repurchases, I have to wonder if the same logic indicates he and Leah don't think the stock is cheap today. They aren't repurchasing and they aren't buying stock themselves.
Stock is getting cheaper. However, it doesn't have to be cheap to return capital. I would be fine with periodic special dividends--a handful of high quality businesses already do that. I can more readily imagine a company like Copart would pursue this as an option as opposed to buying back shares at seemingly high multiples.
One other thing I think I think... Last time the company did large tenders and share repurchases, it was in a slightly different place in history. The company today is more profitable and even more solidified within the insurance industry. The business has proved to be even more dependable and resilient than most investors could have imagined. This could mean it deserves a higher multiple and thus management and the board might be more willing to repurchase at around these multiples.
Good post!
I appreciated Jeff's comments about how he and Leah approach M&A deals as if they're writing a personal check. However, if applied to share repurchases, I have to wonder if the same logic indicates he and Leah don't think the stock is cheap today. They aren't repurchasing and they aren't buying stock themselves.
What do you think?
Stock is getting cheaper. However, it doesn't have to be cheap to return capital. I would be fine with periodic special dividends--a handful of high quality businesses already do that. I can more readily imagine a company like Copart would pursue this as an option as opposed to buying back shares at seemingly high multiples.
One other thing I think I think... Last time the company did large tenders and share repurchases, it was in a slightly different place in history. The company today is more profitable and even more solidified within the insurance industry. The business has proved to be even more dependable and resilient than most investors could have imagined. This could mean it deserves a higher multiple and thus management and the board might be more willing to repurchase at around these multiples.