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Deckers Outdoor Corp. Message Board

  • cwebjohn cwebjohn Oct 1, 2012 10:04 PM Flag

    Share Repurchase Strategy

    One idea that indian proposed is that management has kept silent while the bears have been in attack mode on purpose.

    Jim Cramer's statement that management should come out and speak with him today really got me thinking.

    Management's role is to look out for the long-term value of shareholders. It does not necessarily care about short-term traders. If it were, they would be throwing out press releases every day like it was a penny stock.

    While the stock price is down this much I believe management understands this game of chess. Right now they are positioning for the king. Some would say to go for the cheap pawns to make a board look nice, but the check-mate is what management is planning.

    If you search for "Share Repurchase from All Angles" on any search engine you will find a pretty good view on what should drive share repuchasing.

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    • indian has watched too many movies. no company lets their stock get destroyed, "on purpose", to that they can buyback their stock at a lower price. The very idea is so ridiculous it shouldnt even be discussed. If DECK had a clue that this was going to happen, they certainly would not have spent 200 million on stock priced between $60 adn $80 a share.

    • Indian, it is you who is the amateur. I've been at this for 15 years now, everyday, and I have made just over 20% returns annually over that time, and I have done so with no leverage and extremely little risk.

      I can tell you are an amatuer just by the way you talk. You are definitely one of the cramer watchers and that is without a doubt how you got here and how you learned about the company. You are probably losing your shirt too. Probably in since the $90s.

      Please don't let me stop you from waxing poetic about the company and criticizing all others with "horrifying' analysis. Go on, by all means. I for one can hardly wait to read your posts.

      • 2 Replies to misowhorney
      • Miso, Your track record sounds good in theory. Of course we can all talk numbers here without backing it up with facts so we have no way to know if your are lying or not. I'm starting a collection of money managers that have beat the benchmarks(using S&P 500 as benchmark). People with real track records. The main criteria is that they must have been in business for 10 years or longer. Ideally 20 years. One thing you did not mention was your turnover. I wish we could still post links here at YF......this new format really sucks. Personally, I don't care about beta in a portfolio, yes it's nice to have a portfolio with lower than average beta but of course alpha is all that really matters to me.

        At this point I have only 2 managers with verifiable track records. You can google these firms for all the details.

        1. Martin Capital Advisors(Paul Martin) 11.8% per annum from 1991 to 2012. S&P did 9% over that period. This firm has extremely low turnover and is very tax efficient because of it.

        2. Sterling Global Strategies(Mark Eicker) 15.35% over the last 10 years versus S&P doing 5.33% over the same period. They don't publish there turnover but it appears to be higher because they are trend followers.

        3. Claude Shannon 28% per annum for 30 years with almost no turnover. I'm not sure what the S&P did over this period. Nobody to this day has come even close to Shannon's long term track record.

        If anyone has any names of firms/managers that I can google and verify, I'd love to see them. First criteria is that they must have been in business for a minimum of 10 years. 2nd...That they beat the S&P over the full duration. I care more about fees and turnover also. Firms must charge 1% or less of total assets. Most hedge funds fail at this point since they charge too much and rarely beat S&P over long periods....especially after their fees and taxes.

      • Misohowney, I think I speak for everyone on this board when we say no way is anything you just wrote even remotely close to the truth. 20% annually for the last 15 years, no leverage and little risk. Hmmm...right, I'm sure. Sounds very realistic.

        Secondly you imbecile, the very fact that I am still here and didn't run away like amateur chickens usually do when a stock goes against them disporves your very original thught that I am the amateur.I continue to be here and constantly reeat myself that just because a stock drops doesn;t mean anything. Dropping from 120-30 dosn;t mean we can;t be at 300 36 months from now.

        I never stated management did anything on purpose. Clearly management and insiders have no idea of the short term direction of a company's stock price on a regular basis or this management would not have institured the full buyback unitl after the biggest drop of all. I DID state that I do believe now management had thought of buying back another 200M shares after the first initial buyback but seeing how cheap the stock became all of a sudden, blew through the first 100M so they can start on the second.

        But someone with a 20% annual return for the last 15 years with no leverage and no risk would have understood that right? Where do you nuts come from?

        Z

    • The only problem with this theory is that the stock is down 75% in the last year. Management has already bought back shares, but at much higher prices. Just how low are they willing to let the stock go until they refute the claims that Uggs aren't selling??

      As I stated before, paying a dividend rather than buying back approx 10% of the float would be best for the long term shareholders. Especially considering they've already bought back shares at prices 100% higher than where we stand today.

      The 75% drop int he stock price explains to me, management has done a lousy job managing the company and shareholders' expectations. They should be not be cheered or given a free pass. Period.

      • 3 Replies to spittinimage6
      • There are different approaches to producing value. When a stock has a depressed price, the first natural thought is there must be a problem. This is perhaps one of the greatest problem investors have. Often times investors are too afraid to jump into a stock when it has been beaten down.

        In the same manner, when a leadership team decides to determine the value of their company they are looking at what they feel the company should be valued at. It is possible that the company calculated that Decker's stock was actually undervalued when it started buying back shares. You cannot fault a company that is buying shares at a price they believe is below the intrinsic value of the company. We can debate fair value vs. intrinsic value all day long, but I believe the company is using an intrinsic value estimate when they determine to buy shares back.

        So lets say the company decides to issue a dividend. The article points out that investors begin to rely upon dividend increases. If the dividend is not increased, investors then grow impatient. Dividends then become like a drug, which if taken away can have a huge side-effect.

        In a share buyback the company is actually returning more value to the long-term shareholders because it is buying back the company at below-intrinsic value prices. This actually benefits the long-term shareholders because it increases their share value and contracts the outstanding share count.

        I believe there is a fundamental issue regarding the psychology of investing when it comes to dividends vs. share buybacks.

      • management failed to institute a divident because they under-reestimated the short guys and the stuff they can accomplished

      • the shorting guys can short millions, as they have, bringing the price to 1/3 of what it was creating a vastly artificially depressed stock price and wait for years for the rest of the market to accept that price because there is no divident being paid. they sit and they waiting for the years without the divident

    • Excellent analysis CW. I could not agree more. Management should never lower themselves and appease traders. I'm sure management is loving this opportunity.

      • 1 Reply to jaquecroissant
      • Jaques, I just gave you one as well. Thanks Bud. A positive and negative even out. All is again right in the world. Lucky the price has come down some and brought some more intelligent people to the board, brings more viewpoints and conversation. Nice to have while we remain patient. WE BOTH knew a few months back that this was a possibility and will take awhile. Now with the huge buyback and possibility of borrowing more after this one to coninue buying EVEN more back, this is where we want the stock to be until its over. Someone on this post mentioned how investors are sometimes clueless about what it takes to make money in the market when it comes to a buyback. But in general when it comes to the market, all you need is one undervalued company to change your whole life. This could be it. 5 years to a decade from now I don't believe I'll ever have to work again.

        Z

    • one thing is for sure is that they should stay as far away from cramer as possible. the last thing i want is cramer liking, loving, or otherwise plugging a stock that i'm long in. i've seen it a hundred times. i hope that the CEO learned his lesson and stays far away and does not do it. cramer plugged deck and then acted as if he never heard of it while the shorts attacked it and his silence certainly didn't help.

      if i'm a company, i want cramer hating my stock and never ever talking about it on his show, except of course to say he hates it. oh sure, you might miss out on a certain amaturish buzz to the upside for a short time, but at the end of the day its not even close to worth it. sell, sell, sell cramer...

 
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