GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

Alco Goes Big on Buybacks

October 11, 2012 | About:
gurufocus

Barel Karsan

17 followers
Today, ALCO Stores (ALCS) reported that it has purchased 12% of its shares in one fell swoop. If you haven't looked at this company already, you may wish to do so. This is a profitable net-net that traded at a 58% discount to its net current assets. Following this large repurchase, that discount now rises to 62% by my calculations!

Alco was able to do this by buying a large block of shares from a single shareholder. The selling shareholder wasn't disclosed in the release, which could be scary for remaining shareholders; after all, if an insider (e.g. a manager or director) was selling such a large amount, it could suggest the company is either in trouble or that foul play (using company money to enrich insiders) is occurring. But that does not appear possible here; this is one of those rare times that value investors can breathe a sigh of relief that insiders don't actually own enough shares to make such a sale possible.

With a little digging, it turns out that there is an outside shareholder that disclosed having purchased almost this exact number of shares in January of 2011. That shareholder is Aviva, a European insurance and investment company. Back when they bought, Alco was trading much closer to book value; it's quite likely that the tough business conditions and falling stock price scared the non-value-minded owners of these accounts into submission.

For further discussion of the risks and opportunities facing this company, see here.

Disclosure: Author has a long position in shares of ALCS.

About the author:

Barel Karsan
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 3.2/5 (5 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK