Have you ever heard of Cannibal Stocks?
These are companies that consistently buy back their own shares.
Today I’m sharing a list of 180 (!) interesting cannibal stocks with you.
Cannibal Stocks
Cannibal stocks?
Today's article is an article shared by TJ, who writes Compounding Dividends. He explains you why share buybacks are so interesting + a list of 180 (!) cannibal stocks.Cannibal stocks return capital to shareholders by buying back their own shares.
The interesting thing?
Buybacks increase your ownership of the company.
An easy way to understand this is to think about sharing a pizza.
The more people there are, the smaller each slice is.
Buybacks reduce the number of slices, making your slice bigger.
How many shares you own doesn’t change, but how much of the company you own does.
If you own a business that earns $10 per share and the company buys back 50% of its outstanding shares, EPS will increase from $10 to $20.
If everything else remains equal, the stock should double.
The chart below shows how different levels of buybacks affect returns:
In addition to generating attractive returns, buybacks are often more interesting than dividends as they are more tax efficient.
This image shows the cumulative returns of different factors, net of taxes.
Capital allocation choices
In general, companies have 4 capital allocation options:
Organic growth
Pay down debt
Dividends
Share buybacks
We will look at the shareholder yield in this article.
Shareholder yield = Dividend Yield + Buyback YieldAs you can see, shareholder yield performs even better than dividends alone!
One of the reasons we love Fiscal.ai?
It calculates the Shareholder Yield for you.
Here’s the shareholder yield of the company Evolution AB.
Evolution AB’s current shareholder yield equals 7.3% (!):
A Cannibal Example
🏠 NVR
NVR is a homebuilder in the United States.
Between 1993 and 2024, the company bought back more than 80% (!) of its outstanding shares.
Shares outstanding 1993: 17.9 million
Shares outstanding 2024: 2.9 million
83.8% of shares bought back
And this while the company didn’t pay any dividends.
Since 1993, the stock increased from $5.5 to $7,500. This means it’s a 1,400 bagger!
The Cannibal Universe
Are you ready to look at more than 180 companies returning capital to shareholders?
Let’s dive into the list!
You can download it for free here:
Everything In Life Compounds
Pieter
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Book
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Used sources
Interactive Brokers: Portfolio data and executing all transactions
Fiscal.ai: Financial data