Joy Global (JOYG) to Buyback 1/5th of Shares this Year; 2/5th by 2011

Submitted By Trader Mark
Thanks for a reader for pointing out this Joy Global (waytoinvest.com/quote/JOYG">JOYG) news. My first thought was "yeh but are hedge funds done selling it?" - that's how bad this market has become. News has not mattered. Now again, stock buybacks don't mean anything unless they are followed up on - many companies "announce the setting aside of money for buybacks" but never follow up. But this one appears to be "real", and takes out $1B of a $5B company by the end of 2008. That means earnings PER share increases by 1/5th (does that matter in this market? Who knows anymore) This is exactly why we bought Alliance Data Systems (ADS) - which has been steadfast in a ratty market - a huge buyback.

Joy Global Inc., which makes heavy equipment for the mining industry, said Wednesday its board increased its share repurchase program by $1 billion to $2 billion.
The board also extended the buyback plan's expiration to the end of 2011, from the end of 2008.
Joy Global, which had roughly 107.8 million shares outstanding as of Aug. 29, said it plans to buyback shares under the first $1 billion authorization before the end of the year.

But this fits into my thesis I've been pushing out the past week or two. Unlike financials which no one seems to want to buy (except pundits) these companies have real assets of value and real earnings. At some price point I expect merger and acquisition activity and/or these type of buybacks. This is quite an enormous one since it saps up so much stock, but we know Potash (POT) CEO Bill Doyle has been in there buying stock all year even at these "bubble prices". Remember folks, these companies are still growing and many have products that are scarce... in the medium to long run (i.e. longer than 99% of hedge funds time frame I assume) population growth and industrialization does not go away. Why these stocks get 5 PE ratios when lousy American retailers get 20 PE ratios is simply marking hedge fund dominance. [Do Earnings Matter?] If you can stand the pain of potentially losing 20% in the next 24 hours when hedge funds liquidate these remain excellent buys. Or if the hedge funds simply liquidate to no end, the companies will buy back their stock like Joy Global is doing, or larger companies will start eating smaller companies. Because unlike banks full of "financial innovations" which are near worthless, these have true hard assets that are worth something in the "real world" as opposed to only in New York City and London.

This news makes me want to buy Joy Global, but I fear another rash of hedge fund selling. I don't know if they are done or not. Maybe they are. Maybe they are not. No one knows. That's the problem. But this puts Joy Global back on my radar as a potential buy in the near future. Falling steel prices should actually help, not hurt this type of company - same with petroleum products which go into so many input costs for these manufacturers. Instead the companies are all traded as if they are oil itself. Nonsensical.

For a company like Potash, I've said once their hyper growth stage is over they are going to turn into a cash cow machine - spinning off dividends left and right as I truly believe even when their new supply comes on in 2011! (not next year, not the year after) there will still be a hightened demand for potash and new higher level of prices. Not that it matters to institutional money whose time frame is "next week at the longest". But by then it might be private the way the stock is getting trashed.

Folks, rigth now the stock market is like a video game where fundamentals mean nothing. At some point fundamentals will again matter - but it appears not until all these levered hedge funds are unmasked and neutered. There are many companies out there with excellent businesses and high cash flows. In the end they will win. We just need to have cash available to buy them, whenever the relentless selloff and develerging is complete. For now I remain mostly on the sideline because each day brings completely random action.

[Sep 3: Someone Needs to Dig Out Joy Global]

Long Potash in fund; no personal position

Did you like this article?

Login or register to post comments
Email this page
Reset vote
10 points

Discounted Louis Vuitton

Submitted by lili on Fri, 03/05/2010 - 1:37am.

Discounted Louis Vuitton Handbags,Purse & Wallets Online Shop - Compare our prices to other distributors, louis vuitton online shopis the best choice, Huge Saving! Louis Vuitton is luxury gifts, French fashion, the replica louis vuitton sale is woman best friend. With Louis Vuitton replica. Shop Discounted Louis Vuitton Handbag, Wallet, Purse and Accessories, compare to louis vuitton sale, we are the best choice.

Everyone men would like to

Submitted by Ecboots on Tue, 03/02/2010 - 9:03am.

Everyone men would like to have a paif of mbt shoes, timberland boots, puma shoes, also many women would like to have christian louboutin shoes, ugg bailey button boots and louboutin sale. when you see mbt sale, at the same time you will find timberland boots sale. there are so many products, i can introduce you with mbt lami shoes, timberland roll rop boots and timberland 6 inch boots. do you like about them? if you don't like you can make attention to puma shoes sale. If you choose sth loves by women, how about designer handbags? just it! there are gucci handbags,chanel handbags, Louis Vuitton Handbags hot sale now, there are also some other womens shoes, like ugg argyle knit boots and so on, if you like to have a louboutin shoes, don't miss this christain louboutin sale, if you like ugg boots, also just catch the ugg boots on sale, don't miss this chance to choose you like.

Cheap Porsche Design replica

Submitted by ugg mbt on Fri, 02/26/2010 - 12:42pm.

Cheap Porsche Design replica watches welcome to each customer,wholesale jordan shoes,nike air max 2009,wholesale Nike Shox Shoes,On Web of Replica you can buy replica Porsche Design Watches,mbt shoes,wholesale rolex watches,porsche design watches,Porsche Design replica watch,Burberry Handbags,Dolce Gabbana Handbags,Louis Vuitton Handbags,free shipping,Dolce Gabbana Handbags,wholesale ed hardy,The website must make you satisfied?

A lot Aof people are

Submitted by fanren on Thu, 02/11/2010 - 11:27am.

A lot Aof people are familiar with the brand “MBT” but a lot among them don’t have clear idea of the functions of discount mbt shoes sale. As an advanced consuming commodity， let’s take a look at the prices of shop of discount mbt shoes. Without question, office workers and people who like going shopping can afford MBT Chapa sale . However, in terms of students who have no earning, it is comparatively difficult for them to afford a pair of MBT shoes unless they have wealthy parents. I’m sure most people bare this idea. In my opinion, mbt shoes sale are not necessarily expensive because a pair of shoes can be used for at least three years due to its solid structures. Therefore, in the long run, a pair of MBT shoes is not so expensive if we detach the expenditures to several years.MBT Chapa Gray Shoes are used in sports. A lot of professional athletes wear MBT Chapa Shoes to advance or cooperate with their trainings to prevent damages caused by sharp exercises. In addition, MBT Chapa can be used in daily life. It can train your muscles, burn calories, protect your joints and so on