Buyback Bets on Barnes
01/03/2003 12:00 am EST
David Fried is the leading authority on corporate buybacks and his Buyback Letter is the only such newsletter to base its investment decisions on share repurchases. Notes Fried, “When companies buy back their own stock, it’s an enormous vote of confidence by those who know it best.” For his top pick for 2003, the advisor turns to book retailer, Barnes & Noble.
"Barnes & Noble (BKS NYSE), our top pick for 2003, has been added to our 'stock pickers' portfolio. We have closed out 26 positions in this portfolio since we began publishing. Of these 26 trades, 23 were profitable. The average profit for the winning trades was 165%, while the average loss for the three losing trades was 38%.
"Barnes & Noble is currently near the low of its 5-year trading range ($16.30-$48.00). Further it repurchased almost 4.4% of its shares at about $21.00 a share in the just concluded quarter. Disappointing news last week knocked the shares down to its current level of about $17.20. At the current price, the stock is selling for less than half of its lowest average annual p/e ratio since 1993. To us, it looks like a Christmas gift from the market. Buy BKS at market prices."