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"Not only have the newsletter’s portfolios outperformed a buy-and-hold, they have done so with slightly less risk than the overall market .......... That’s a winning combination,.."
Mark Hulbert, The Hulbert Financial Digest - August 2015
The Buyback Letter’s Indexed Portfolios have gained an average of 531.98%.
Since inception in March 1997, the Buyback Letter has outperformed the S&P 500 almost 4 to 1.
Just look at the profits our winning buyback stocks have already earned:
- HerbaLife, up 172.32% in 18 months …
- Joy Global, up 112.59% in 6 months
- Lexmark International -- up 59.88% in 6 months
- Joy Global -- up 112.59% in 6 months
- Synaptics Inc. -- up 106% in 7 months
- Altria -- up 338% in 9 years 8 months
- Union Bancal, up 130% in 3 years 4 months
- Papa Johns, up 102% in 18 months
- SkyWest, up 96% in 3 years
- Stamps.com, up 74% in 2 years 6 months
- Pepsi, up 70% in 1 year 9 months
- Seagate Technology, up 46% in 6 months
- Ing Group, up 66.81% in 6 months
- Polycom, up 47.77% in 7 months
- U.S. Oncology, up 49.27% in 2 months …
- Pediatrix Medical Group, up 53.69% in 6 months …
Investing in “buyback” stocks – companies that repurchase their own shares – may be the only 100% legal way to get inside information on companies that significantly outperform the market.
Think about it: for a company to buy back stock, the share repurchase plan has to be approved and authorized by the Board of Directors. If there is a better buy signal than a group of company insiders voting to spend corporate funds on repurchasing shares, I don't know what it is. Some of the world’s most successful investors, including multi-billionaire Warren Buffett and the legendary Peter Lynch, are enthusiastic advocates of owning buyback stocks. “Stock buybacks are the simplest and best way a company can reward its investors,” says Lynch.
For example, did you buy Citrix Systems when the company announced a plan to repurchase their shares? If not, you missed out on 186.7% profit in one year. If you did buy, a $10,000 position in the stock would have turned into $28,670 in just 12 months.
And did you grab shares of Autozone when they made their buyback announcement? Following the announcement, their shares rose 190.5% in 14 months. A $10,000 investment in the stock would have nearly tripled to $29,050 in a little over a year.
Cable & Wireless also made a major repurchase of their shares, which proceeded to gain 99.3% in 9 months. Your profit on this trade: $9,930 in less than a year.
If you do not regularly and deliberately invest in buyback stocks, you are missing out on superior gains, because…
Buybacks clobber the S&P 500
In March 1997, I launched the first investment advisory to focus on finding winning buyback stocks: the Buyback Letter. It is the first – and only – newsletter that gives you indexed portfolios constructed exclusively from buyback stocks.
I knew the service was needed because, while buybacks as a group outperform the S&P 500 by a wide margin, not every buyback is a winner.
During the 21 years following inception of the Buyback Letter, I proved that my system for picking winning buybacks works: the Buyback Indexed Portfolios gained an average of 758.72% … outperforming the S&P 500 by more than 3 to 1.
Updated in every issue, these 5 indexed portfolios give you a selection of more than 30 buyback stocks to invest in:
||S&P 500 252.09%
||S&P 500 252.09%
||S&P 500 252.09%
|5-Stock Buyback Health & Bio-tech Portfolio
||S&P 500 143.22%
Our 20-stock Buyback Index generated a whopping 873.52% gain over 21 years – nearly 3.5X the return of the S&P 500 during the same period.
Even our Buyback Income Index, designed for investors who seek dividend income over growth, generated more than 3.5X the returns of the S&P 500 since its inception.
These are not theoretical portfolios, by the way. I put my personal wealth into every buyback stock I recommend. So I have a vested interest in being prudent and making sure the buyback companies I recommend are going to make money for me and my subscribers.
And I don’t just tell you what to buy. I also tell you what – and when – to sell, as well as what buyback stocks you should reinvest your profits in.
Your subscription to the Buyback Letter includes at no cost our weekly Sentiment Guide. It tells you, based on market sentiment, how much of your funds to invest in our buyback portfolios.
My system for screening and identifying winning buyback situations led us to Joy Global, which gained 112.59% -- more than doubling our money in just 6 months.
It also uncovered NVR. In the 7 months following their repurchase announcement, NVR gained 127.50% -- turning a $10,000 position into $22,750.
Another Buyback Letter winner, U.S. Oncology, more than doubled, gaining 107.3% in one year after we added it to our portfolio.
One university study found that a group of buyback stocks generated 24% average annual return over 10 years. Had you owned a $100,000 portfolio of these stocks, it would have grown to $859,440 in one decade.
Why buybacks make money
We’re bullish on buyback stocks because, as a class, they consistently make money far in excess of the market averages.
Why is this so? Because owning the stock of companies repurchasing their own shares is like having company insiders tell you whether you should invest in their business or not.
Think about it: investors instinctively realize that no one knows more about a company and its prospects than the senior executives who run it.
Wall Street doesn’t know, because they’re outsiders. For the most part, analysts print what PR and investor relations professionals tell them to print.
And obviously, senior management would not be buying back shares of their own company unless they were absolutely convinced that the stock price was heading higher.
So in this way, buyback announcements are the only legal form of “inside information” available to investors today. If you like following insiders, you’ll love investing in our buyback stocks!
In addition, a corporate buyback reduces the number of shares outstanding, which creates a favorable supply and demand dynamic.
Plus, reducing the number of shares increases the earnings per share (EPS), leading to higher share prices. Peter Lynch said, “Stock buybacks are the simplest and best way a company can reward its investors.”
“Companies that buy back stock reduce their outstanding share count,” notes an article in the Wall Street Journal. “That can boost earnings per share, making shares more valuable.”
Charles Biderman, CEO of TrimTabs, says. “Buybacks are the source of cash that can take stock prices higher.”
Following a major stock repurchase announcement, the company’s share price may go up immediately and for multiple years thereafter, as long as the firm follows through and actually repurchases the shares.
Last year, shares in GulfMark Offshore rose 7% in one day after the company announced a new stock buyback program.
This year, Apple shares gained 1.2% rising to $463.20 when the company accelerated its stock buyback program to $100 billion, up from $10 billion last year.
And when the Washington Post announced a plan to repurchase 750,000 Class B shares, its stock jumped 4.3% in 24 hours.
For small stock repurchase programs, share price often goes up 2% to 3% on the day of the announcement. With larger buyback programs, the average one-day price gain is 16%.
The stock price not only rises immediately after the repurchase announcement but continues for several years: a study from the Leeds School of Business found that the average buyback outperforms the market for 4 years following announcement of the share repurchase program.
Philip Morris bought back stock worth $35 billion for 26% annual returns. And Dollar Tree generated 34% annual returns buying back stock worth $6.9 billion.
Which buybacks are tomorrow’s winners?
During one 10-year period, the median total return of buybacks expressed as an annual average compounded was 22.6% vs. 14.1% for the S&P 500 during the same period.
That means a $10,000 investment in buybacks would have become $76,600 in a decade – more than double the $37,400 you would have made investing in the S&P 500.
Yet not every buyback stock makes money, which is why serious buyback investors follow the Buyback Letter: We know how to pick the buyback companies most likely to generate superior gains.
I start by examining hundreds of corporate buyback announcements, checking to make sure they actually buy back their stock; many do not.
I pour over all the key statistics about the company, examining the company’s financial strength, cash flow, growth, yield, surprises, and other critical indicators to make sure the stock is rock solid and reasonably priced.
Almost all of the stocks in the Buyback portfolios have market capitalizations of at least $2 billion and many are Blue Chips. This ensures that we are dealing with companies that are transparent and well run, giving us superior returns on our buybacks with NO added risk.
The stocks I add to the Buyback Portfolios can fund their buybacks and any dividends they pay from operations. Their debt to equity ratio indicates that they are not overly leveraged.
Warren Buffett says: “I favor repurchases when a company has ample funds to take care of the operational and liquidity needs of the business.”
Of prime importance, our recommended stocks actually buy back the shares they promised when they made their repurchase announcement. Many do not.
And, their repurchase programs are significant: they buy back enough stocks to have a net decline in shares outstanding after any dilution from options. For a buyback to be meaningful, the company should repurchase at least 4% of the outstanding shares.
“Pay attention to whether the companies are repurchasing their shares,” says Mark Hulbert of The Hulbert Financial Digest. “You can construct a portfolio with good odds of long-term success by buying the buy backs.” No wonder the Buyback Letter made The Hulbert Financial Digest Honor Roll for 3 consecutive years!
“The Buyback Letter provides valuable recommendations about companies that are actively repurchasing shares,” says Andy Kilpatrick, author of Of Permanent Value: The Story of Warren Buffett. “I think this is a very worthwhile newsletter.”
The best-kept secret on Wall Street
In my opinion, buyback stocks may just be the best-kept market secret on Wall Street. They clearly generate superior returns with no extra risk. There are new buyback opportunities cropping up all the time. Yet most investors I know don’t pursue them actively. To me, they’re leaving easy money on the table.
Our 5 buyback stock portfolios have all beaten the S&P 500 handily – one of them by as much as 21:1.
Multiple research studies have demonstrated conclusively that buyback stocks, on average, outperform the broad markets by a large margin.
Mark Hulbert, publisher of the prestigious Hulbert Financial Digest, observes: “A significant body of academic research has found that the average stock not only rises immediately after the announcement of a repurchase program but continues to outperform the market for several additional years as well.”
One professor at Southern Illinois University found that stocks repurchased with insider buying beat other companies by 29% over 4 years.
Another study, titled Market Indirection to Open Market Share Repurchases, tracked 1,290 companies that announced buybacks from 1980 to 1990.
The result? Four out of five of the buyback portfolios outperformed the market, and none of them underperformed.
Recently, Aetna announced a plan to repurchase $750 million in common stock, and as a result its share price jumped 4.1% in one day.
There are no shortage of buyback opportunities for my subscribers and me to choose from: In 2011, U.S. companies repurchased $437 billion worth of their own stock – a 46% increase from 2010.
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The Buyback Letter costs $195 a year – about 54 cents a day – less than the price of a cup of coffee..
Even the profits you make from just one of our buyback winners can easily pay back your subscription investment 10X over or more.
Buyback Letter winners have included Reebok, up 82% … American Express, up 448% … GE, up 267% … and Intel, up 324%.
Accept my offer of a 30-day free trial to the Buyback Letter today and you get 4 FREE Bonus Gifts (value: up to $191.40 each):
** FREE Bonus #1: The One Buyback Stock You Must Own NOW …this is my current #1 buyback pick and has been for some time. We've already tripled our money on the stock. And there is plenty of upside potential for investors who get in today.
** FREE Bonus #2: The Best Buyback Stock for Dividend Income … the company started paying a quarterly dividend in 2008; since then the quarterly dividends have almost doubled, growing about 12.4% a year, as have earnings. They have announced plans to repurchase $1 billion of their stock, which would decrease shares outstanding around 6.1%.
** FREE Bonus #3: Sentiment Guide … your subscription to the Buyback Letter includes at no cost our weekly Sentiment Guide. It tells you, based on market sentiment, how much of your funds to invest in our buyback portfolios. This Guide is unique to the Buyback Letter. You won't find it anywhere else!
** FREE Bonus #4: Buyback Tracker … your subscription to the Buyback Letter includes at no cost our real time buyback tracker with the latest buyback announcements in real time.. It keeps you up to date on all the latest buyback announcements. This service alone could cost you $190.40 a year!
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That way, you can see – and own -- every buyback stock I am currently rating a “buy” … without paying me a dime.
If you decide the Buyback Letter is not for you, just let us know within 30 days and you won’t be charged a dime. That way, you risk nothing.
But I urge you to hurry. This 30-day free trial offer is for a limited time only. And once it expires, it may never be repeated again.
Click here for your 30-Day Free Trial Or call 888 BUYBACK (289-2225) today.
David Fried, Editor
The Buyback Letter.
P.S. I subscribed to financial newsletters before I launched the Buyback Letter. As a result, I swore that I would never let my subscribers experience anything that bothered me about other newsletters, like dropping coverage on a stock without letting the subscribers know, or publishing only the good results.
At the Buyback Letter, we never, ever leave you wondering about what happened to a stock or what you should be invested in. We clearly state what should be bought and sold – and when. Past history is there for all to see at any time. As the editor of the Buyback Letter, I give you my personal guarantee of complete transparency: our goal is to make your investing easier!
To enjoy the market-beating performance of our buyback stocks, click here for a free 30-day trial of the Buyback Letter now.