The company deserves credit for sticking with their most opportune investments, even in light of people showing up on their conference call and complaining about the lack of a dividend. By the same token, if they encounter good portfolio investment opportunities, I think you're correct that they would cut the size of their buyback to fund such investments. I certainly get the impression from the JP Morgan conference that they crank out an ROI on everything they consider, including the buybacks.
Last quarter's 13.4 million share buyback appeared to be as much a reflection of their portfolio investment opportunites as it was the discount to NAV on the shares. Investors appeared excited about the buyback, whereas I viewed it as just an optimization of the either/or, and barely moved the needle on my price target for additional share purchases.
The striking part about the entire US stock market right now is that overall stock buybacks by US corporations are at a 6 year high, even thought the S&P is setting consecutive record highs. I get a lot of queries as to why that is so, given that ACAS is one of the few bargains OUT there when it comes to the attractiveness of a company buying back it's own stock "cheaply".
The reason is reflected in the continued poor Capital Expenditure metrics for the US as a whole. While they have risen off the rock bottom numbers we saw earlier in the economic recovery, they remain mortibund for cap-ex on new ventures and/or commercial "expansion".
This is a reflection of slow US GDP growth, but it's even MORE a reflection of the hostile business climate in the US today. When people ask me why Apple Corp. is floating a bond issue to pay a dividend while simultaneously hoarding hundreds of billions in cash overseas...
... I can only point to the highest-in-the-world US corporate tax rate of 35% and suggest that they not replace Barack with Hillary in 2016 if they ever hope to turn US cap-ex around and spur growth.
In the Sept Qtr they used about $190M to buy back shares. That was $40 M above the previous level. I believe they stated that the addition money had been available because they had stopped re-paying debt because it was reduced to the level they wanted. Byut anyway the share purchases will be subject to Cash income -exits from investments less expenses. Management is a firm believer of share repurchases when conditions warrent it as the best use of money in their opinion.. Their recent actions in AGNC and MTGE prove that and we better understand what they are doing or we will not be satisfied and might get discouraged at a time that will not be advantageous to our portfolio performance.
The results so far, as I see it-ACAS is rocketing up over 26 times from the $0.59 bottom in 2009 even though AGNC and MTGE have recently stumbled and we are not receiving a "Taxable" dividend currently.