David Fried

David is the editor and publisher of The Buyback Letter, the only investment newsletter dedicated to finding opportunities among companies that repurchase their own stock. The Buyback Letter has been ranked #1 in risk adjusted returns by Hulbert Financial Digest.

David has been profiled in the NY Times, LA Times, USA Today, Barrons, Bottom Line Personal, Kiplinger's, Forbes, Fortune, and BusinessWeek.

Investment style

Buyback stocks outperform the market year after year, so why not just follow Buyback announcements and invest yourself? Unfortunately, it’s not that simple.

First, not every company that announces a stock buyback actually follows through and executes the buyback as announced. Sometimes the actual number of shares purchased is far fewer than announced – converting a major buyback into a minor, insignificant one you should simply ignore. Other times, a company cancels its stock buyback entirely – often, with no public announcement. In such cases, the only way you’ll know for certain that a buyback has taken place is by looking at a company’s quarterly and annual reports. Fried does this detective work and verifies that a stock buyback actually takes place and that it is, in fact, likely to lead to higher stock prices. The key is to know who is making the buyback announcement and whether they are likely to go through with it.

Buyback prospects are divided into 3 categories:

Category 1:  Firms that never follow through with their buyback announcements. We never recommend these companies.
Category 2:  Companies that buy back stock only if and when their shares are bargain-priced. Sky West Airlines is an example of this type of company. Sky West only repurchases shares when they are close to book value. If share price rises much beyond that level, the company won’t buy its shares back. Companies like Sky West give us the opportunity to make good profits over a two- or three-year period as long as Fried can buy shares close to the price at which the company itself purchases them.
Category 3:  Companies committed to long-term buyback programs as a way of building shareholder value. These companies can be counted on to fulfill their promise when they announce a stock buyback, and therefore have the most appeal for long-term investors.

Carefully analyzes each buyback stock, each buyback company, separating rhetoric from reality. Fried pores over announcements, scrutinize quarterly and annual reports, and talk to company officials, lawyers and competitors.