David Fried maintains an ongoing model portfolio based exclusively on companies undergoing active buyback programs. Here, the editor of The Buyback Letter looks at three new additions to his portfolio, all in the financial sector.
Investors Bancorp (ISBC)
Investors Bacnrop is the holding company for regional bank Investors Bank, which has 137 offices in New Jersey and New York. As of September 30, 2015, the company had assets of $20.33 billion.
It raised $2.2 billion in new funds in an IPO in 2014, used to transition the bank from a consumer bank to a commercial bank.
ISBC also bought eight community banks since 2008, gaining $4.5 billion in new deposits. The CEO has his sights on Philadelphia, Long Island, and Westchester County.
Activist investor Clifton Robbins' Blue Harbour Group disclosed an 8.2% ownership stake in ISBC last fall. His firm seeks high quality businesses that are fundamentally undervalued and trading at a discount.
KCG Holdings (KCG)
KCG is a leading independent securities firm that was the product of a merger of high speed trading firm Getco and Knight Capital in 2013.
The firm engages in market making, high frequency trading, electronic execution, and institutional sales, trading global equities, fixed income, currencies, and commodities via voice or automated execution.
The company has been undergoing intense restructuring and streamlining for the past two years and has been selling off non-core assets.
Analysts see it as well positioned for future earnings growth. Meanwhile,
management has reduced shares outstanding by a whopping 22.79% in the last 12 months.
Navient (NAVI)
Navient is the nation’s largest student loan servicer with more than $300 billion in student loans from more than 12 million customers.
The company was in headlines in late December as shares tanked following the news that the amount Navient would be able to draw from one of its debt facilities was decreased.
Analysts said that the tailspin was an overreaction and could very well represent an opening for investors to take part in Navient's long-term value by getting the stock at a significant discount.
In mid-December management announced an additional share repurchase of $700 million, following a $1 billion authorization a year prior. The company has reduced shares outstanding by 11.67% in the past 12 months.
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