Assured Guaranty ticker AGO a "cannibal" that is shooting fish in a barrel.
“When companies with outstanding businesses and comfortable financial positions find their shares selling far below intrinsic value in the marketplace, no alternative action can benefit shareholders as surely as repurchases.”
Assured Guaranty has $6 722m in equity (book value) and 99m shares outstanding.
$6 722m book divided by 99m shares = $68 book value per share.
The share price is $46 per share and the company is buying back $300m in shares.
Equity will decrease by $300m to $6 422m due to money being spent on shares. At the price, $300m / $46 per share, they can buy back 6,5m shares. Bringing the share count down to 99m - 6,5m = 92,5m shares
New book value per share: $6 422m / 92,5m = $69,4 a 2% increase.
Earnings per share should increase by 7% assuming the decrease in book value doesn't hurt profits.
Like shooting fish in a barrel with the water taken out.