Alpha Buying: The Magic of Stock Buybacks - Five Companies That Could Reward Patient Investors

When I first started in this business nearly four decades ago, one of the first lessons I learned from my mentors was to follow the money. And when company insiders start using corporate cash to buy back their own shares, that’s exactly the kind of money trail I love to follow.

You see, companies that aggressively repurchase their shares tend to deliver impressive long-term performance, provided they’re doing it intelligently. It’s not just about throwing money at the market – it’s about disciplined capital allocation that creates lasting value for shareholders who have the patience to let the strategy work its magic.

The formula is deceptively simple: reduce the number of outstanding shares, increase earnings per share even if total profits remain flat, and watch as the stock price climbs over time. Of course, as with any investment strategy, execution matters enormously.

I’ve spent decades watching companies destroy value by repurchasing shares at inflated prices, or worse, borrowing heavily to fund buybacks while neglecting the core business. But when done right – when management has the discipline to buy back shares at reasonable valuations using excess cash flow – the results can be magnificent.

The historical evidence is compelling. Take Apple, which launched its massive repurchase program in 2012 when the stock was trading between $60-80 on a split-adjusted basis. Since then, they’ve bought back hundreds of billions worth of shares while the stock has increased more than tenfold. What’s remarkable isn’t just the stock price appreciation but how the buybacks amplified shareholder returns by concentrating ownership.

Or consider AutoZone, perhaps the most impressive buyback story in American business. Since the late 1990s, the auto parts retailer has reduced its share count by over 80%, turning what might otherwise have been a decent business into a compounding machine. A $10,000 investment in AutoZone 25 years ago would be worth over $500,000 today. While the company grew revenues at a respectable rate, it was the consistent reduction in share count – routinely 5-10% annually – that supercharged investor returns.

NVR Inc., the homebuilder, offers another instructive example. Since the late 1990s, NVR has shrunk its share count by over 75%, helping transform a cyclical housing stock into one of the market’s best long-term performers. What’s particularly notable about NVR is how they continued their buyback program even during housing downturns, when the stock was most undervalued – the exact opposite of most companies that buy high and suspend repurchases when prices fall.

Lowe’s provides yet another case study in buyback excellence. Over the past decade, the home improvement retailer has reduced its outstanding shares by approximately 40% while growing earnings substantially. This combination of operational improvement and shrinking share count helped Lowe’s deliver returns that significantly outpaced the broader market.

Even big banks like JPMorgan Chase have demonstrated the power of well-executed buybacks. Following the 2008 financial crisis and subsequent regulatory changes, JPMorgan received approval to repurchase significant amounts of stock, particularly during periods of market weakness. These opportunistic buybacks at depressed valuations created enormous value for long-term shareholders.

These aren’t just random statistics – they’re the foundation of wealth-building machines that have created fortunes for patient investors who understood the compounding effect of persistent share count reduction.

So where should value-minded investors look today for the next generation of buyback champions? I’ve identified five companies with substantial repurchase programs that could deliver outsized returns regardless of broader market conditions.

Adtalem Global Education ATGE: Education With A Buyback Kicker
Adtalem Global Education isn’t exactly a household name, but this healthcare education provider has been quietly building something special. The company operates institutions like Chamberlain University and Walden University, and business is booming.

What caught my eye was their recent financial performance: revenue up nearly 14% year-over-year to $447.7 million, with total student enrollment climbing 11.6% to over 91,000 students. Their adjusted earnings per share came in at $1.81, blowing past analyst expectations of $1.37.

But here’s the part that really matters to us value investors: Adtalem has been aggressively buying back its own shares. Their February 2022 program authorized $300 million in repurchases, which reduced outstanding shares by 23% at an average price of $39.85.

Having completed that program, they didn’t rest on their laurels. In January 2024, the board authorized another $300 million buyback program running through January 2027. As of December 31, they had already repurchased about 6.89% of shares under this new program, with $140 million still available for future buybacks.

With analysts maintaining a “Strong Buy” consensus rating and an average price target of $119.67, the company has both fundamental momentum and the buyback catalyst we look for.

TEGNA Inc. TGNA: Media with a Value Tilt
TEGNA isn’t trying to become the next streaming giant or social media darling. This Virginia-based media company sticks to what it knows: operating 64 television stations across 51 markets, with affiliations to major networks like NBC, ABC, CBS, and FOX.

What makes TEGNA interesting right now is their aggressive capital return program. In February 2024, they announced a $650 million share repurchase program running through December 2024. This follows their June 2023 accelerated share repurchase agreement with JPMorgan Chase Bank for $300 million, which initially delivered about 11.9 million shares back to the company treasury.

Throughout 2023, TEGNA committed nearly $800 million to share repurchases. That’s serious money for a company of this size, and it’s exactly the kind of aggressive buyback activity that has historically preceded significant share price appreciation.

ACRES Commercial RealtyACR Small Cap with Big Buyback Plans
Moving down the market cap spectrum brings us to ACRES Commercial Realty, which offers an interesting variation on our buyback theme. In December 2024, their board authorized an additional $5 million for repurchasing both common and preferred stock, on top of an earlier November 2023 program that approved up to approximately $4.1 million for common stock repurchases and an additional $10 million for both common and preferred stock.

What makes ACRES particularly interesting is that these buyback authorizations represent a significant percentage of the company’s market cap. When smaller companies implement meaningful buyback programs, the impact on per-share metrics can be dramatic, often leading to significant rerating of the shares.

Dropbox, Inc. DBX: Tech Value Hidden in Plain Sight
Dropbox has transformed from a simple cloud storage provider into a comprehensive collaboration platform, but Wall Street hasn’t fully appreciated this evolution. The company reported solid numbers in its fiscal year 2023 second-quarter results, with revenue up 7.9% year-over-year to $572.7 million and net income of $88.5 million, up from $68.3 million in the prior year.

What really stands out is Dropbox’s aggressive capital return program. In July 2023, the board authorized a $1.2 billion share repurchase program. Then in December 2024, they announced an additional $1.2 billion stock repurchase program alongside securing a $2.0 billion term loan facility.

With a free cash flow yield of 10% and gross profit margins exceeding 82%, Dropbox has the financial firepower to sustain these buybacks while continuing to invest in growth initiatives. This combination of fundamental strength and aggressive share repurchases often leads to significant long-term outperformance.

United Parks & Resorts Inc. PRKS: Leisure with a Buyback Twist
Formerly known as SeaWorld Entertainment, United Parks & Resorts rebranded in February 2024 but maintained the established identities of its SeaWorld and Busch Gardens parks. The company operates a diverse portfolio of theme parks and water parks across the United States.

In March 2024, United Parks’ board authorized a $500 million share repurchase program with no set expiration date. What makes this program particularly interesting is the condition preventing additional repurchases if they would result in Hill Path Capital LP’s ownership percentage reaching or exceeding 50%.

This dynamic creates an interesting corporate governance aspect to the buyback story, but the fundamental reality remains: a significant reduction in share count should drive meaningful improvements in per-share metrics over time.

The Buyback Bottom Line
These five companies – Adtalem Global Education, TEGNA, ACRES Commercial Realty, Dropbox, and United Parks & Resorts – represent different sectors and market capitalizations, but they share a crucial characteristic: management teams committed to returning capital to shareholders through substantial buyback programs.

History has shown that well-executed buybacks can create tremendous long-term value, particularly when companies repurchase shares at reasonable valuations. For patient investors willing to look beyond quarterly fluctuations, these buyback champions offer an interesting opportunity to potentially outperform regardless of broader market conditions.

Remember, the key factors to watch are the size of the buyback relative to market cap, the valuation at which shares are being repurchased, and the company’s ability to sustain or grow its earnings. When these elements align, the resulting performance can be nothing short of remarkable.