Thomson Reuters Stock Repurchase: Why Below Market Price?

Yesterday afternoon, Thomson Reuters announced that it was repurchasing 6.5 million shares of stock in privately arranged transactions as part of its efforts to repurchase approximately 37 million shares through May 2017. As part of the disclosure, Thomson Reuters noted that the privately arranged transactions will occur at prices that are discounted from the quoted market value. You might wonder: Why would these transactions occur below market value rather at market value?

The short answer: It is all about liquidity.

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Philip Morris International: Three Years Of Dividends

If I had to name a stock that shares the most characteristics in common with the Johnson & Johnson of the late 2000s, I would point to Philip Morris International (PM) right now. It has become disfavored the past four years because it has struggled to grow revenues and this struggle has been exaggerated by the strength of the U.S. dollar (remember, Philip Morris International generates 100% of its profits outside the United States so that a strong U.S. dollar will artificially lower earnings while a weak U.S. dollar will artificially raise earnings. And by artificially, I mean that the earnings shifts due to currency fluctuations are illusory unless it is part of a fundamental shift in the equilibrium of exchange rates between the dollar and everything else.)

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The Cost Of Being A High-Quality Bank

I haven’t yet written about the cross-selling scandal at Wells Fargo because I suspect there are more relevant facts that will come out, and I want to analyze them before I publicly share my opinion on the surprising business development. But I do want to use the Wells Fargo news to tackle an ancillary question: “Why would a conservatively managed bank feel pressure to goose earnings?”

The best way to answer that question is through example by looking at the story of M&T Bank (MTB).

If someone asked me to build a portfolio of 50 “buy and hold” forever investments where each of the 50 spots had the lowest possible risk of bankruptcy or permanent capital impairment, M&T Bank would make the list.

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Johnson & Johnson Stock: Reinvested Dividends Since 2002

After publishing my recent article on Johnson & Johnson, I wanted to perform my own case study on the reinvestment impact of Johnson & Johnson dividends over a decent stretch of time to isolate the wealth-creating effect of a small initial dividend amount that grows at a rate of 9-10% annually and gets reinvested along the way.

I chose 2002-2016 as the random measurement period because of a numerical quirk that makes the dividend growth rate seem more tangible. In 2002, the annual dividend was $0.80 per share. By 2016, the quarterly dividend had grown to $0.80 per share. There aren’t many places in Western Civilization where you can honestly quadruple your money through passive means in fourteen years (and if you know of any, feel free to share.)

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Johnson & Johnson Stock: The Acquisitions Continue

Legendary UCLA basketball coach John Wooden was famous for saying “preparation is the prize.”

He explained what he meant by this concept on page 53 of his biography “Wooden: A Lifetime of Observations and Reflections On and Off The Court.”

Wooden’s comment: “Cervantes wrote, ‘The journey is better than the inn.’ He is right and that is why I derived my greatest satisfaction out of the preparation–the ‘journey’–day after day, week after week, year after year. Your journey is the important thing. A score, a trophy, a ribbon is simply the inn. Thus, there were many, many, games that gave me as much pleasure as any of the ten national championship games we won, simply because we prepared fully and played near our highest level of ability. The so-called importance of a particular game didn’t necessarily add to the satisfaction I felt in preparing for the contest. It was the journey I prized above all else. Too often we neglect our journey in our eagerness or anxiety about reaching the goal. A successful journey becomes your destination and is where your real accomplishment lies.”

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