Been reading a bunch of earnings calls this morning, found this bit interesting about debt vs equity repurchases…check out the link below to get the full context:
Courtesy of Andrew Watts – Oaktree Capital on the ADCT F1Q09 earnings call
If you’d bought back bonds, your tangible book would be over $5 right now and instead it’s at $2.70, which is where the stock is trading. So I think the shareholders should be really more cognizant of that kind of situation. And you guys are certainly not alone, but this repurchase of equity has just been a horrible, horrible plague on our markets speaking from my perspective. I think its something people really need to start to – it’s an Emperor has no clothes situation to me. I think people really need to start to look at that.
But I would really encourage you revisit the whole concept of equity repurchases, particularly at significant premiums to tangible book. They’ve just been huge wealth destroyers and, if you have the opportunity on the debt side, you can really create a lot of value there.