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Strategies & Market Trends : Buffettology
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To: James Clarke who wrote (193)5/18/1998 8:38:00 PM
From: Michael Burry  Read Replies (2) of 4691
 
I am so glad to get some feedback on UST. I've posited it on
numerous boards and forums with generally no response. I've
read about their spending habits and compensation, but looking
at the statistics:

EBITDA/DIVIDENDS:
97 - 704/298
96 - 744/277
95 - 705/252
94 - 640/225
93 - 601/199
92 - 502/167
91 - 426/160
90 - 352/128
89 - 301/111
88 - 261/99

So over 10 years, there's pretty good growth. The money that
isn't put into dividends is largely put into share repurchases.
Net income has gone from 130 -> 439 over those 10 years.
The share price has gone from 8 to 25 - plus the dividends.
Repurchases have shrunk total diluted shares from
230M --> 185 million shares over those 10 years.

I've seen a lot of "shareholder-friendly" companies with
a lot worse numbers. The last few years the growth and
the share price have flattened out, and now UST sits
near 3 year lows.

Can you explain "incredibly overcapitalized?" LT Debt
now sits at 100 million and it has brought its ST debt
from 150 million to just 10 million (in lieu of share
repurchases and dividend increases). So $110 million
in total debt relative to total equity of $437 million.
The market cap is 10 times that equity.

With MO, they've been challenged before (most recently
in the early 90's), but as the CEO says, they always
seem to end up doing ok by their shareholders. There's
a 30 year run of steadily increasing share prices to
fight against.

Thanks,
Mike
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