Buy back followed by CR never a good look… I think there always...

Buy back followed by CR never a good look…

I think there always has to be a compelling reason for a buy back (like cleaning up the registry to prepare for a dual listing or destroying the will of the shorters) but there rarely is. More often than not, it’s done because a company has run out of ideas.

In KAR’s case, as a pure oil play, I see a lot of advantage in just banking hundreds of millions of dollars of annual profits and sitting on them. In this inflationary/high interest rate environment, it’s not the worst move. Rather than chasing new acquisition targets when POO is sitting pretty (OPEC seems comfortable with Brent US$90-$120 range,) it’s better to have the funding there to scoop up anything that presents itself at rock bottom prices the next time POO poos itself… (which, like clockwork, it will one day, just don’t ask me which decade,) and it also acts as your insurance policy for those bad times when they return. In the meantime, it means they can afford to shell out healthier and healthier divs, making the SP more and more attractive while the cash pile continues to bulge.

KAR will be $5 before we know it and $10 before I’m finished with it.