Oh boy... it's a party on the farm. We let the ram loose with the ladies. We moved the flock to the back pasture (to give everybody their fair privacy) and let the big, bad stud do his work. We've never seen such a twinkle in a fella's eye as when he licked his lips and put his nose in the air. He trotted off like he had been appointed the king of the world. As we climbed into bed last night, we're pretty sure we saw the faint glow of a cigarette out in the field. He won't have time to relax. It's a big flock. It's a mutually beneficial relationship. If he does his job, our herd will be three times its size next spring. He licks his lips thinking about the girls. We lick ours thinking about the money he'll bring us. Our little ATM is about to pay off once again. Your TurnDoing what we do best and boiling everything down to its simplest elements, the ram's role in life isn't all that different from what's making the stock market go up and down these days. The CEO of BP likened his oil firm to a "cash machine" during this month's earnings call. Thanks to low interest rates and high oil prices, BP is handing out piles of cash to anybody who simply buys a share of the company. The top brass was most boastful about the company's huge buyback plan... We've likened buybacks to a "magic money machine" many times before. The energy giant just added another $1.25 billion to its buyback plan. As long as oil prices remain above $60... BP promises to continue buying back its own shares at a rate of a billion bucks per quarter. In the shepherding world, that'd be like our neighbor eating one of his rams each month. It would create better job security for our horny little guy... and a bigger slice of the market for our herd. Fewer sheep out there means more profit for us. Share buybacks follow the same logic. At the start of its third quarter, BP had 3.4 billion shares on the public market. But after spending $900 million to buy them back at a price of about $25 each... it now has 100 million fewer shares to go around. That's a lot of rams off the market. It means each share is now worth that much more of the fun and accounts for that much bigger of a slice of the company... and its sales. Like the CEO said, it's a cash machine. Everybody's doing it. Cashing InBed Bath & Beyond recently made headlines with its fast-paced billion-dollar buyback. The big British bank HSBC sent its investors on a wild ride after it announced a $2 billion plan to buy back its own shares. Exxon Mobil flexed the strength it has long been known for when it stunned with news that it was dusting off a whopping $10 billion plan. The old-school money machine is back. Just this week, Walmart said it had earmarked $2.2 billion for buybacks. That's on top of the 22% of shares the company has pulled off the market in the past decade. And even boring old Warren Buffett is in on the action. In fact, what he's been up to gives strong credence to what's really driving the market these days. His iconic firm Berkshire Hathaway sold $2 billion worth of stock over the last quarter... and rewarded shareholders by spending $7.6 billion buying back its own shares. In all, it's bought back more than $20 billion worth of shares this year. Buffett would rather sell other stocks... and use the cash to buy his own. By almost all measures, the buyback activity throughout the market over the past six months has not only come back to 2019's rabid pace... but eclipsed it. It's more proof that we're not the only one convinced the tactic is the best and most reliable way to make money these days. Without a doubt, buybacks are a leading force - if not the leading force - pushing the market higher this year. How to Play ItBut don't get us wrong. It's not all rosy in the realm of buybacks. You can't buy a stock just because the company makes a flashy announcement. It still needs quality fundamentals, good leadership and a fair valuation. That's always the case. It's vital to ensure that a company is actually making good on its buyback plans. Many only talk about buying back shares and never actually do it. Many more simply use the plans to cover up the dilution created by rewarding insiders with excessive stock options. You've got to buy the right ones. But if you're investing in stocks that aren't buying back their own shares, it pays to ask why. Why not own something with a built-in tailwind? Why not own a stock with a management team that is clearly intent on raising the share price? A lot of companies have the ram... and the ewes. It's crazy not to put them together and let some magic happen. Everybody wins... and some even get lucky. Be well, Andy P.S. Yes, this buyback idea even works with crypto! There are several projects actively "buying and burning" their tokens. The key to finding them lies in one simple metric. To see what it is - and to witness the huge potential gains from simply tracking this one unique figure - click here. We reveal it all in our brand-new interview. Want more content like this? | | | |
Andy Snyder | FounderAndy Snyder is the founder of Manward Press, the nation's premier source of unfiltered, unorthodox views on money and what it means for a free society. An American author, investor and serial entrepreneur, Andy cut his teeth at an esteemed financial firm with nearly $100 billion in assets under management. He's been a keynote speaker and panelist at events all over the world, from four-star ballrooms to Senate hearing rooms. | | |
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