🗞️ 10 Best Share Repurchasers of the Last Decade

Happy Sunday!

This week we’re discussing the unprecedented concentration of the S&P 500, Zyn.com’s nationwide suspension, and the 10 best performing share cannibals of the last decade.

Let’s dig in.

News Roundup

• Nvidia Surpasses Microsoft: The global leader in AI computing technology Nvidia, officially surpassed Microsoft this week to become the largest company in the world by market value. Nvidia broke a $3.3 trillion market cap on Thursday, which is an astounding rise from its $92 billion market cap just 5 years ago.

  Today, the combined market cap of Nvidia, Microsoft, and Apple stands at ~21.5% of the total S&P 500, with the Magnificent 7 as a whole accounting for 34%. That’s the highest concentration of top positions that the S&P 500 has ever had… and by a wide margin.

• Autodesk Gets an Activist: This week, popular activist investing firm Starboard Value announced that it has amassed a $500 million position in the graphics design giant Autodesk. In an announcement made through a letter to shareholders, Starboard Value also stated that it’s filing a lawsuit against the company over delayed disclosure of an investigation into accounting issues.

  The letter mentions that Autodesk’s management team withheld announcing the investigation until after the nomination deadline to help solidify the re-election of its board of directors. Autodesk’s stock jumped 7% following the announcement of Starboard’s stake.

• Phillip Morris Suspends Zyn.com sales: Over the last 10 years, oral nicotine pouches have seen a meteoric rise in popularity as more and more consumers switch away from smoking and chewing tobacco. And the leader of that oral nicotine category is Zyn, which Phillip Morris International acquired as a part of its 2022 purchase of Swedish Match for $16 billion.

  However, on Monday, Phillip Morris announced that it was suspending all nationwide sales on Zyn.com after it received a subpoena from the Attorney General of Washington DC. The subpoena is requesting information from Phillip Morris about its compliance with a 2022 rule which banned the sale of flavored tobacco products in the D.C. area.

  Phillip Morris stated that only a “very small percentage of nationwide Zyn volumes” comes from Zyn.com.

Recommended Content

10 Best Performing Share Cannibals

Repurchasing stock is one way for a company to return its available capital to shareholders. By reducing the total amount of shares, a company is giving the remaining shareholders a bigger slice of the business (and it’s earnings).

For all intents and purposes, this serves much the same role as issuing a dividend.

And over the last 10 years, only 46 companies in the United States have repurchased more than 5% of their outstanding shares on an annual basis.

Of those 46, here are the 10 best performers:

1.) Murphy USA

Operates 1,733 gas stations under the Murphy USA, Murphy Express, and QuickChek brands. Primarily operates throughout the Southeast, Southwest, and Midwest US.

• 10-Year Total Return: 880%

• Total Share Reduction: -56%

• EV/EBIT: 16x

2.) Louisiana Pacific Corp 

Sells building product primarily for use in new home construction, repair and remodeling, and outdoor structure markets.

• 10-Year Total Return: 578%

• Total Share Reduction: -48%

• EV/EBIT: 15x

3.) PulteGroup

Homebuilder that designs and sell single-family detached, townhomes, condominiums, and duplexes.

• 10-year Return: 550%

• Total Share Reduction: -43%

• EV/EBIT: 7x

4.) O'Reilly Automotive

Leading automotive parts & supplies retailer for both the DIY and Professionals markets.

• 10-year Return: 599%

• Total Share Reduction: -48%

• EV/EBIT: 21x

5.) Lowe’s Corp

2nd largest home improvement chain in the US. Offers appliances, seasonal and outdoor living, lumber, and more to both individuals and pros.

• 10-year Return: 494%

• Total Share Reduction: -48%

• EV/EBIT: 15x

Platform Update

FinChat Enterprise

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Meme of The Week

Don’t get me wrong, we here at FinChat love AI. After all, FinChat Copilot saves investors tons of time in the research process.

But with Nvidia going from a $92 billion to $3.3 trillion market cap in less than 5 years, it’s hard not to think that the market is getting a little ahead of itself at the moment.

Nvidia certainly deserves much of its performance as revenue is up more than 7-fold since 2020, but over the last 5 years, Nvidia has also seen its price to earnings ratio has go from 20.8x to 74.8x.

With all the excitement around AI and the meteoric rise of any AI-associated company, I’m reminded of this iconic scene from the movie “The Big Short”.