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Валгрин Ко. Message Board

  • lovindaoutdoors lovindaoutdoors Nov 15, 2012 1:49 PM Flag

    How WAG blew $300M on buybacks

    Im always blown away to see companies announce share repurchase programs, only to end up purchasing stock at its highest levels and reissuing at lower levels. During fiscal years 2011 - 2012 WAG spent 3.2B on share repurchases. The average price paid was $36. WAG then issued 83M shares to complete their 45% investment in Alliance Boots at an average price of $32.37/share. Why repurchase shares at $36 and reissue same shares at $32 n change? 83M * (36 - 32.37) = 302M. Thats more than one quarters worth of dividend payments. OUCH! WAG, why do you do this??

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    • Chicken feed! I hope that management continues to use cash flow to reduce the float. It doesn't matter whether they get the low tick. They end up dollar cost averaging, if the buyback program is professionally administered. Higher eps results from fewer outstanding shares.

      Mngmt must have felt that the Boots acquisition was just too good to pass up. We'll see.

      WAG is a safer place to hide during recessions than bonds or CDs. People will continue to buy drugs and health and beauty over the counter products. Also, it would appear that alcoholic beverages are off to a good start.

      WAG is taking business back from CVS and will continue to do so.