I just read the 10K, which was released today,
and as of 2/29/00, NPK had 7,209,606 shares
outstanding!!! This means that the company has bought back well
over 100,000 shares of stock lately!!! According to
the 10K, NPK bought back 155,000 shares in 1999.
Let's hope the stock price stays low so that they can
continue to buy back shares. The current buyback
authorization is for 750,000 shares total (including those
repurchased last year).
The 10K also indicated that
Maryjo has given up the CFO post. As of November 1999,
Randy Lieble, a long-time employee, is the
I talked to Maryjo last Friday, and despite the
impending release of the 10K, she wouldn't comment on the
buyback situation when I asked her about it. She did tell
me to expect an announcement on this year's new
products by mid-June. According to Valueline, several new
products are in the works for this year.
the buyback continues!!!
Where are these numberss coming from. If you are
anlyzing the cash flows please show me your calculations.
Over 1/2 of their cash flow comes from investment
income which is the interest they are recieving on their
cash. Theirfor if the paid out all off their cash the y
would report 1/2 of the earning sthey report now.
Your position in NPK is undoubtedly underwater.
It hardly matters if your lastest purchase (as you
claim) is in the money.
Since you have very low
expectations as an investor, you probably should consider
bonds rather than stocks.
A credit analyst
would find NPK appealing because its operations will
produce the necessary EBITDA to cover interest expenses
far into the future. The company is prepared to
support at least $100 million of debt.
equity analysts ignore this company because its growth
prospects are minimal, at best. Rational stock buyers
aren't interested in no-growth companies unless there is
a compelling story to spark interest. A large stock
buyback, going private, getting taken over, or a huge
special dividend are events that might catch a lot of
If you have been a patient long-term
investor in NPK, then you have received miserable returns
in the biggest bull market in history. To defend the
poor stock market performance of this company and
ignore its prospects is to admit that your motives are
emotional and not based on any rational investing
You look foolish by saying that WalMart would even consider buying NPK. WalMart has never been in the production business. Do your research--this company would have to be bought by someone else.
I too read that part of the 10-K. And the sad
truth is even more apparent now than before. Even
though a very limited buyback is occurring, it has not
lifted the stock price. It would be bad enough to watch
the stock price drop with no buyback in place. But to
see the price tumble as far as it has while the
company has been repurchasing a few shares shows how
little regard Wall Street has for this
Obviously Wall Street is a barometer of sentiment and real
opportunities are often overlooked. But analysts understand the
impact of corporate policies and practices. In other
words, sometimes Wall Street gets it right. And in this
case the Street has it right.
Did you also
notice that NPK posted earnings from interest income of
about $9.4 million? And total earnings were around $20
million, if I recall correctly. The buybacks cost about $5
million. And the 10-K stated that repurchased shares were
used for stock option plans. In other words, the stock
NPK repurchased will eventually be sold back into the
market when employees receive the shares through option
awards. Some buyback!
The point of stock buybacks
is to reduce the shares outstanding permanently!
Creating an inventory of shares to be reissued to
employees is nothing of the sort. And who knows what will
happen to the strike price of the employee options if
the market price of NPK stock remains at such
depressingly low levels. All too often companies reissue
options at a price that makes it profitable for the
employees to sell. And the cost of the price difference is
always dumped on the existing shareholders who do not
receive this perk.
The buyback authorization
might be for 750,000 shares. Big deal! At the current
rate, we've got four years to go before this buyback is
completed, based on the pace of repurchases. If the latest
year is an example, the stock price, at best, will
hover around the book-value-per-share level. That means
the price MIGHT stand still for the next four years.
Given the amount of the dividend and the fact that
repurchases are occurring at or somewhat above book value,
you can calculate that book-value-per-share will stay
close to its current level. That's not going to excite
investors and lead to a higher stock price. And of course,
if the stock price rises a few dollars per share,
the buybacks will probably be suspended. There is
most certainly an internal limit on the price NPK will
pay to reacquire its own shares.
products?! How about old products. I was in Costco the other
day, and I made an effort to look for NPK products
while there. I couldn't find any. Is Costco a seller of
NPK products? I don't know. But the store was jammed
and if NPK is not selling though Costco, an
opportunity has been lost.
New products?! The
Brooklyn Bridge was built faster than NPK rolls out new
products. Mid-June for an announcement! How embarassing. If
our current economy can be characterized by anything,
a surge of new and improved products has been
central to our prosperity.