yadayada Posted July 31, 2014 Share Posted July 31, 2014 im happy enough they are buying back at all haha. Link to comment Share on other sites More sharing options...
Libs Posted July 31, 2014 Share Posted July 31, 2014 <During January 2014, we repurchased 736,000 shares of our common stock at an average price of $67.93 per share for $50.0 million . The repurchases were made under a pre-arranged stock trading plan in accordance with guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The shares repurchased under the 10b5-1 plan were recorded as treasury shares and made in accordance with current share repurchase authorizations of the Board. > Why would a company do this via a "pre-arranged stock trading plan," as opposed to just being opportunistic? Is that why they paid $70 a share? Link to comment Share on other sites More sharing options...
gfp Posted July 31, 2014 Share Posted July 31, 2014 A company does its repurchase plan this way to cover its ass legally. It provides a "safe harbor" for the issuer and allows them to continue their repurchase activity during blackout periods and periods when management is aware of material nonpublic information. There are two ways they can do this - an automatic plan or by delegating to a third party who doesn't have access to nonpublic information. I suspect that OUTR delegated to an investment bank to purchase $50 million per quarter and the investment bank made the call on when to buy the shares (oops). <During January 2014, we repurchased 736,000 shares of our common stock at an average price of $67.93 per share for $50.0 million . The repurchases were made under a pre-arranged stock trading plan in accordance with guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The shares repurchased under the 10b5-1 plan were recorded as treasury shares and made in accordance with current share repurchase authorizations of the Board. > Why would a company do this via a "pre-arranged stock trading plan," as opposed to just being opportunistic? Is that why they paid $70 a share? Link to comment Share on other sites More sharing options...
Libs Posted July 31, 2014 Share Posted July 31, 2014 I see. Interesting that Buffett has no such concerns. I suppose publicly setting that 1.2X book floor mitigates the legal risk. Thanks. Link to comment Share on other sites More sharing options...
siddharth18 Posted July 31, 2014 Share Posted July 31, 2014 Coinstar (the coin biz) seems pretty strong as I'd have thought people would've stopped using coins a long time ago...(If DVDs are in a secular decline, aren't coins too?) Redbox lumpy as always but didn't fall off the cliff in the face of the worst release schedule...They will start testing price increases later in the year which is a good thing. Someone asked on the CC if the online streaming prices (VOD) will increase or decrease: CEO said studios would rather have it increase rather than decrease. I still think there's good upside from price increases, the inherent stability of redbox due to the pricing power/convenience and potential for ecoATM to split out cash flow. One thing they must absolutely do is change their policy of returning capital from buybacks to dividends. Link to comment Share on other sites More sharing options...
yadayada Posted July 31, 2014 Share Posted July 31, 2014 I think coinstar is mostly used by a certain segment of the population. A decent number of poor people don't have bank accounts because of fees among other things (because it is not interesting for banks to service this population segment) or get paid in cash. Don't think that cash will ever die out for this reason. So they use coinstar to get rid of their coins. And besides that, people always want the option to pay their plumber in cash to avoid taxes. And also cash is this tangible thing. Maybe money would become too intangible if cash stops existing. And people use cash in bars etc. As for redbox, the same principle goes I think. 10 or 15% of population does not have internet. And then a pretty sizable % has slow internet because they don't use the computer much, because they are bad with computers or too poor. Good luck trying to download 3-4gb movies on a regular basis on those crappy connections. So in this regard it would actually be cheaper to rent a movie every once in a while vs taking faster internet :). I think that adds another hurdle here. So Redbox will likely fill demand there 5-10 years from now there. Especially with it's low break even costs. Unless comcast etc build faster and cheaper internet. But this is not likely to change on short to medium term. Even if that does change, it would take years to upgrade and build infrastructure and actually make internet cheaper. @siddharth, why dividends? I rather have them pay off some debt and buy back at the same time. Stock is dirt cheap. I think management is very confident about Ecoatm, and thinks Redbox will keep generating cash for some time. So in that case without redbox you would get 200-250m in FCF with little risk of going away. So on taht basis alone the stock is cheap. So buybacks would make a lot more sense then dividends. And I guess in that case they should not pay off debt as well. Link to comment Share on other sites More sharing options...
Libs Posted July 31, 2014 Share Posted July 31, 2014 Re Coinstar.. Help >:( I lifted this from the 2013 A.R. I just spent 30 minutes crunching the numbers and still couldn't make them work. The problem is ( see below)... $41.39 per transaction X 76MM transactions = $3.1 BILLION revenue. Not $300MM. So something's wrong. The answer is...? 1) each transaction is really only $4.13, not $41 ( but $4.13 sounds really low) 2) There were only 76,000 transactions ( impossible - that's 3.6 transactions per machine per year) 3) Libs is an idiot, ( fiil in the blank with answer) 4) Libs is a genius and spotted something everyone else has somehow missed. Someone PLEASE tell me what (3) IS.... From the A.R: ---------------------------------------------------------- Dollars in thousands, except average transaction size 2013 Revenue $ 300,218 Ending number of kiosks 20,900 Total transactions (in thousands) 76,120 Average transaction size $ 41.39 ---------------------------------------------------------------- Link to comment Share on other sites More sharing options...
snow pea Posted July 31, 2014 Share Posted July 31, 2014 I have done no research, this is just my common sense interpretation / guess. Is revenue ~10% per transaction? In that case, customer puts in $41 of coins, gets $37 in bills (or gift cards or whatever). So revenue on a $41 transaction is $4.1, and the numbers work? Link to comment Share on other sites More sharing options...
yadayada Posted July 31, 2014 Share Posted July 31, 2014 I think for larger numbers % is smaller. But in general 10%. For paypal same as cash, but giftcards for the store they are in, consumer doesn't pay a %, the store pays in that case. Link to comment Share on other sites More sharing options...
siddharth18 Posted August 1, 2014 Share Posted August 1, 2014 @siddharth, why dividends? I rather have them pay off some debt and buy back at the same time. Stock is dirt cheap. I'm not arguing against debt repayment - that is a separate issue. (But since we're in the low interest rate period, macro-economically speaking, shouldn't the company wait until rates rise, then buy its own debt on the cheap and cancel it - rather than repaying it now?) I'm just suggesting that all return of capital to shareholders (if and when that happens) be made ONLY dividends and NOT buybacks. I say this because the price per share the company pays to buy back may not be the best price. And the company clearly demonstrates recklessness when it buys shares at $70/share. Let me explain - a buyback is basically taking away your dividend and forcibly making you use that dividend to buy more shares from a CERTAIN group of shareholders at a CERTAIN price. Would you buy OUTR shares at $70/share? You may or you may not...I personally don't want to at this point, from a risk/reward perspective...but nonetheless, this is what the company has done for me... My point is that each person's estimation of a good price and a bad price is different and I'd rather have each individual shareholder decide THE PRICE, and THE PERCENTAGE of the profits that ought to be reinvested into more shares of OUTR. Care must be taken to ensure that the price paid per share makes sense to the remaining shareholders. Reckless buyback at ANY price is not something I prefer. Of course, I wouldn't have to say this if the management had a track record of disciplined capital allocation (eg: buffett, malone, henry singleton)...but I doubt that's the case with OUTR. Link to comment Share on other sites More sharing options...
siddharth18 Posted August 1, 2014 Share Posted August 1, 2014 Re Coinstar.. Help >:( Hey Libs, From their 10-K form (http://www.sec.gov/Archives/edgar/data/941604/000144530514000256/a201310-k.htm) under "Revenue Recognition" (Page 57): Coinstar- Revenue from a coin-counting transaction, which is collected from either consumers or card issuers (in stored value product transactions), is recognized at the time the consumers’ coins are counted by our coin-counting kiosks. Our revenue represents the fee charged for coin-counting transactions. Link to comment Share on other sites More sharing options...
peter1234 Posted August 1, 2014 Share Posted August 1, 2014 Just to summarize: 300M in revenues 76M transactions $4 revenue per transaction What threw you off was $41 average transaction size... ;) Link to comment Share on other sites More sharing options...
yadayada Posted August 1, 2014 Share Posted August 1, 2014 @siddharth, why dividends? I rather have them pay off some debt and buy back at the same time. Stock is dirt cheap. I'm not arguing against debt repayment - that is a separate issue. (But since we're in the low interest rate period, macro-economically speaking, shouldn't the company wait until rates rise, then buy its own debt on the cheap and cancel it - rather than repaying it now?) I'm just suggesting that all return of capital to shareholders (if and when that happens) be made ONLY dividends and NOT buybacks. I say this because the price per share the company pays to buy back may not be the best price. And the company clearly demonstrates recklessness when it buys shares at $70/share. Let me explain - a buyback is basically taking away your dividend and forcibly making you use that dividend to buy more shares from a CERTAIN group of shareholders at a CERTAIN price. Would you buy OUTR shares at $70/share? You may or you may not...I personally don't want to at this point, from a risk/reward perspective...but nonetheless, this is what the company has done for me... My point is that each person's estimation of a good price and a bad price is different and I'd rather have each individual shareholder decide THE PRICE, and THE PERCENTAGE of the profits that ought to be reinvested into more shares of OUTR. Care must be taken to ensure that the price paid per share makes sense to the remaining shareholders. Reckless buyback at ANY price is not something I prefer. Of course, I wouldn't have to say this if the management had a track record of disciplined capital allocation (eg: buffett, malone, henry singleton)...but I doubt that's the case with OUTR. They stated that if price would go up, they would pay out dividends. CEO said that I think. and 70$ is still really cheap. now it is even cheaper. I think a more fair (but still conservative) valuation lies around 110-120$ with current share count. I also think that if price stays low long enough, they keep buying back at current levels. Also buybacks at these levels is much better then dividends. Let's say they pay 200m$ in dividends instead. Now you pay taxes, but even if you were not paying taxes it would be less effecient. Dividend example: Let's say fair value is 2.5 billion$. You own 100 shares bought at 70$. Share count is 20 million. Now they pay 200 million in dividends at 70$ per share, so that is 14%. Now without taxes let's say you reinvest all that at 70$ a share. You now have roughly 8k$ invest or about 114 shares. If we assume fair value is 2.5 billion, I get 2.5/20 million = 125$ per share. So with 7k$ invested you now have a 7250$ gain,, or 103%. Buyback example: They buy back 200 million$ instead at 70$. so that is 2.85m shares reduced. Or 17.15m shares. If we assume the business is worth 2.5 billion, I get a 145$ share price. on 100 shares that is ~14600$. Or 108% gain. I think this gets quickly amplified if you assume 50% is bought back or paid out in dividends. For example the difference between 50% paid out in dividends or buybacks if share price does not move is a 257% return in buybacks case, and a 167% return for dividends pay out and reinvested. Note that this does not even include any taxes yet! And if you count in double taxation for dividends, buybacks seem to be the superior method unless they start buying back at very high prices. But I probably sold this one before that happens. Link to comment Share on other sites More sharing options...
racemize Posted August 1, 2014 Share Posted August 1, 2014 @siddharth, why dividends? I rather have them pay off some debt and buy back at the same time. Stock is dirt cheap. I'm not arguing against debt repayment - that is a separate issue. (But since we're in the low interest rate period, macro-economically speaking, shouldn't the company wait until rates rise, then buy its own debt on the cheap and cancel it - rather than repaying it now?) I'm just suggesting that all return of capital to shareholders (if and when that happens) be made ONLY dividends and NOT buybacks. I say this because the price per share the company pays to buy back may not be the best price. And the company clearly demonstrates recklessness when it buys shares at $70/share. Let me explain - a buyback is basically taking away your dividend and forcibly making you use that dividend to buy more shares from a CERTAIN group of shareholders at a CERTAIN price. Would you buy OUTR shares at $70/share? You may or you may not...I personally don't want to at this point, from a risk/reward perspective...but nonetheless, this is what the company has done for me... My point is that each person's estimation of a good price and a bad price is different and I'd rather have each individual shareholder decide THE PRICE, and THE PERCENTAGE of the profits that ought to be reinvested into more shares of OUTR. Care must be taken to ensure that the price paid per share makes sense to the remaining shareholders. Reckless buyback at ANY price is not something I prefer. Of course, I wouldn't have to say this if the management had a track record of disciplined capital allocation (eg: buffett, malone, henry singleton)...but I doubt that's the case with OUTR. If you own the stock, don't you think it is undervalued? Correspondingly, wouldn't you prefer a buyback? If not, why do you own the stock? Or, if not, why don't you sell the corresponding number of shares that they bought back for you to generate your own dividend? Eric, we need another one of your buyback/dividend tirades! =p. Link to comment Share on other sites More sharing options...
peter1234 Posted August 1, 2014 Share Posted August 1, 2014 Eric, we need another one of your buyback/dividend tirades! =p. LOL. But we already you the answer: buy backs are always always always better. ;D ;D Link to comment Share on other sites More sharing options...
siddharth18 Posted August 1, 2014 Share Posted August 1, 2014 If you own the stock, don't you think it is undervalued? Correspondingly, wouldn't you prefer a buyback? If not, why do you own the stock? Or, if not, why don't you sell the corresponding number of shares that they bought back for you to generate your own dividend? Eric, we need another one of your buybackidend tirades! =p. My specific grievance is that for a stock like OUTR, lumpy results are a given, and a corresponding sell-off is also a given. The stock was ~$70 when tender offer was announced and then the sentiment shifted towards anticipation of a weak quarter and we saw a haircut of 20% (stock went from $70 to $55). It'd be great if management could time their buybacks to coincide with these periodic weaknesses, but they have proven that they can't. So a better alternative is to pay out a divvy. Link to comment Share on other sites More sharing options...
writser Posted August 1, 2014 Share Posted August 1, 2014 That doesn't make sense to me. What's your estimate of fair value? Link to comment Share on other sites More sharing options...
yadayada Posted August 1, 2014 Share Posted August 1, 2014 If you own the stock, don't you think it is undervalued? Correspondingly, wouldn't you prefer a buyback? If not, why do you own the stock? Or, if not, why don't you sell the corresponding number of shares that they bought back for you to generate your own dividend? Eric, we need another one of your buybackidend tirades! =p. My specific grievance is that for a stock like OUTR, lumpy results are a given, and a corresponding sell-off is also a given. The stock was ~$70 when tender offer was announced and then the sentiment shifted towards anticipation of a weak quarter and we saw a haircut of 20% (stock went from $70 to $55). It'd be great if management could time their buybacks to coincide with these periodic weaknesses, but they have proven that they can't. So a better alternative is to pay out a divvy. yeah but the stock is cheap at 70$. A lot of cheap companies hoard cash, make awefull aqcuisitions, or pay dividends when the stock is cheap. These guys buy back. I don't really expect them to time this perfectly. It seems fair value is north of 100$ here, and that is not even optimistic. So buybacks at 70$, and an indication that management will pay dividends when the stock goes up seems fair to me. Link to comment Share on other sites More sharing options...
Libs Posted August 1, 2014 Share Posted August 1, 2014 Just to summarize: 300M in revenues 76M transactions $4 revenue per transaction What threw you off was $41 average transaction size... ;) Thanks all. Link to comment Share on other sites More sharing options...
GregS Posted August 1, 2014 Share Posted August 1, 2014 If you own the stock, don't you think it is undervalued? Correspondingly, wouldn't you prefer a buyback? If not, why do you own the stock? Or, if not, why don't you sell the corresponding number of shares that they bought back for you to generate your own dividend? Eric, we need another one of your buybackidend tirades! =p. My specific grievance is that for a stock like OUTR, lumpy results are a given, and a corresponding sell-off is also a given. The stock was ~$70 when tender offer was announced and then the sentiment shifted towards anticipation of a weak quarter and we saw a haircut of 20% (stock went from $70 to $55). It'd be great if management could time their buybacks to coincide with these periodic weaknesses, but they have proven that they can't. So a better alternative is to pay out a divvy. That strikes me as hindsight bias. It wasn't a given that it would sell off at $70. Lots of people put values over $100. Better questions: Should a company buy back stock at a level where lots of insiders are selling, or where a big activist shareholder is selling? Should a company whose core business is declining be taking on debt to buyback stock? Link to comment Share on other sites More sharing options...
jeremykgold Posted August 5, 2014 Share Posted August 5, 2014 If you own the stock, don't you think it is undervalued? Correspondingly, wouldn't you prefer a buyback? If not, why do you own the stock? Or, if not, why don't you sell the corresponding number of shares that they bought back for you to generate your own dividend? Eric, we need another one of your buybackidend tirades! =p. My specific grievance is that for a stock like OUTR, lumpy results are a given, and a corresponding sell-off is also a given. The stock was ~$70 when tender offer was announced and then the sentiment shifted towards anticipation of a weak quarter and we saw a haircut of 20% (stock went from $70 to $55). It'd be great if management could time their buybacks to coincide with these periodic weaknesses, but they have proven that they can't. So a better alternative is to pay out a divvy. yeah but the stock is cheap at 70$. A lot of cheap companies hoard cash, make awefull aqcuisitions, or pay dividends when the stock is cheap. These guys buy back. I don't really expect them to time this perfectly. It seems fair value is north of 100$ here, and that is not even optimistic. So buybacks at 70$, and an indication that management will pay dividends when the stock goes up seems fair to me. Yada, Do you remember or have a link to where company said they would shift to dividends when stock goes up? Tia Jeremy Link to comment Share on other sites More sharing options...
krazeenyc Posted August 5, 2014 Share Posted August 5, 2014 If you own the stock, don't you think it is undervalued? Correspondingly, wouldn't you prefer a buyback? If not, why do you own the stock? Or, if not, why don't you sell the corresponding number of shares that they bought back for you to generate your own dividend? Eric, we need another one of your buybackidend tirades! =p. My specific grievance is that for a stock like OUTR, lumpy results are a given, and a corresponding sell-off is also a given. The stock was ~$70 when tender offer was announced and then the sentiment shifted towards anticipation of a weak quarter and we saw a haircut of 20% (stock went from $70 to $55). It'd be great if management could time their buybacks to coincide with these periodic weaknesses, but they have proven that they can't. So a better alternative is to pay out a divvy. yeah but the stock is cheap at 70$. A lot of cheap companies hoard cash, make awefull aqcuisitions, or pay dividends when the stock is cheap. These guys buy back. I don't really expect them to time this perfectly. It seems fair value is north of 100$ here, and that is not even optimistic. So buybacks at 70$, and an indication that management will pay dividends when the stock goes up seems fair to me. Yada, Do you remember or have a link to where company said they would shift to dividends when stock goes up? Tia Jeremy They said they would shift to dividends (not when the stock goes up), but when the share count goes down too much. They want to maintain liquidity for the institutional shareholders. Link to comment Share on other sites More sharing options...
jeremykgold Posted August 5, 2014 Share Posted August 5, 2014 If you own the stock, don't you think it is undervalued? Correspondingly, wouldn't you prefer a buyback? If not, why do you own the stock? Or, if not, why don't you sell the corresponding number of shares that they bought back for you to generate your own dividend? Eric, we need another one of your buybackidend tirades! =p. My specific grievance is that for a stock like OUTR, lumpy results are a given, and a corresponding sell-off is also a given. The stock was ~$70 when tender offer was announced and then the sentiment shifted towards anticipation of a weak quarter and we saw a haircut of 20% (stock went from $70 to $55). It'd be great if management could time their buybacks to coincide with these periodic weaknesses, but they have proven that they can't. So a better alternative is to pay out a divvy. yeah but the stock is cheap at 70$. A lot of cheap companies hoard cash, make awefull aqcuisitions, or pay dividends when the stock is cheap. These guys buy back. I don't really expect them to time this perfectly. It seems fair value is north of 100$ here, and that is not even optimistic. So buybacks at 70$, and an indication that management will pay dividends when the stock goes up seems fair to me. Yada, Do you remember or have a link to where company said they would shift to dividends when stock goes up? Tia Jeremy They said they would shift to dividends (not when the stock goes up), but when the share count goes down too much. They want to maintain liquidity for the institutional shareholders. Ok thanks. Do you remember when they said this? Trying to find it. Link to comment Share on other sites More sharing options...
siddharth18 Posted August 5, 2014 Share Posted August 5, 2014 http://www.boothlaird.com/wp-content/uploads/2014/08/Booth-Laird-Investment-Partnership-Outerwall-long-thesis.pdf Link to comment Share on other sites More sharing options...
yadayada Posted August 5, 2014 Share Posted August 5, 2014 So apparantly 30% of the US does not have broadband internet. That is interesting. This number is only slowly shrinking. And then a pretty large part has broadband, but with limiting datacaps. Link to comment Share on other sites More sharing options...
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