$250 million doesn’t go as far as it used to, especially if you’re a flagging retailer trying to prop up a drooping stock.
AutoNation doubled down on its latest round of buybacks this morning, authorizing a new $250million share repurchase program. If the amount sounds familiar that’s because AN did exactly the same thing less than 6 months ago.
How’s that working out for shareholders? Not great, as it turns out:
Per some nice work over at SeekingAlpha, AN seems to have purchased about 7-million of its own shares since January 27th.
I’ve written extensively about my personal experiences discussing buybacks with AutoNation execs. I’d guess they feel the program is a success based on the fact that shares are only down ~25%. All they had to do to contain losses was repurchase 5% of the company on the open market.
If you’re a long term believer in the company you want the shares to fall. By manipulating the price AN’s board is preventing you from getting a better entry point. To the extent buybacks actually work to prop up stock prices they effectively steal from outside investors by artificially inflating your cost basis.
I don’t have any position in the stock so I really don’t care. It just makes me feel bad to see investors applauding a board for ripping them off.
See Also: How’s The Buyback Going, AutoNation?If you enjoy the content at iBankCoin, please follow us on Twitter