IBM (IBM) - Get Free Report upped its buyback by $15 billion Tuesday and increased its dividend to 40 cents from 30 cents. CEO Sam Palmisano said the immediate effect of this increased buyback would be to increase EPS by 12% to 14% next year, which is 1% to 3% higher than expected.
A look at the various Stockpickr portfolios that hold this tech luminary casts an interesting light on IBM, which even after Tuesday's 3.5% rally and the
ascent toward 13,000 remains on the
list -- the 18 Dow stocks that are down for this century. IBM is down 10% in the 21st century, which is better than other Dogs, including
, which is down 43%, and
, which is down 56%.
IBM also resides in the
portfolio. Over the past 10 years, IBM has been a voracious eater of its own shares. Last year alone, the company bought back more than 97 million shares for $8.1 billion, paying around $83.50 per share. IBM had about $5 billion remaining from its board authorizations at the end of December. The $15 billion extension now gives the company $20 billion in buying power. (Keep an eye on TheStreet.com TV for Jim and I discussing IBM later today.)
In his recent book,
, Jim Cramer suggests buying companies that are not only announcing buybacks but have also considerably reduced their share float in recent years, proving that the buyback is actually doing something instead of just replacing options issued.
IBM has bought back more than 1.2 billion shares on a split-adjusted basis, at an average price of about $62 per share since the inception of our share repurchase program in 1995. In other words, IBM has been a successful trader of its own shares. Given that IBM plans to aggressively repurchase shares at this level, if it were to be similarly successful, the stock would end up near $150.
Other buyback kings that make this list include
, and IBM's top competitor,
Now let's look at some other portfolios where Big Blue lands. IBM makes the list of
. The idea being if that a company is confident enough to give over cash flows to charities then those cash flows are probably stable. Also, a dollar toward a charity probably has similar value to a dollar spent on marketing for the company. IBM donated just under $150 million last year, slightly under
$1.7 billion man, based on his pay from his hedge fund Renaissance Capital,
, which allocates Intel's pension fund money, owns shares of IBM.
Nobody does hardware better than IBM, which is why it's
to see IBM in the
Powershares Lux NanoTech
ETF. This is the research that could finally move IBM beyond software and services for the mainframe.
PowerShares Dynamic Deep Value
At the time of publication, Altucher and/or his fund had no positions in stocks mentioned, although positions may change at any time.
James Altucher is a managing partner at Formula Capital, an alternative asset management firm that runs several quantitative-based hedge funds as well as a fund of hedge funds. He is also the author of
Trade Like a Hedge Fund
Trade Like Warren Buffett
. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Altucher appreciates your feedback;
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