General American Investors Co. Inc. (NYSE:GAM) is targeting to buy back 1 million shares from its outstanding share count, which marks an extension of the company’s buyback program. Management did not disclose the exact budget that has been set aside for the shares repurchase. But a press release sent out by the company stated that the repurchase will be undertaken when shares are trading at a certain discount to underlying assets.
Shares of General American Investors are currently changing hands in the vicinity of $32. They are up more than 10% over the last six months, but down more than 7% over the last 12 months. What the board of GAM has determined is that it would make sense to buy back the shares when they are trading at a price that is at least 8% discount relative to the net value of the underlying assets. That was the closest the management came to reveal what might be spent in the repurchase program.
Nevertheless, the exact date of rolling out the buyback program remains unclear at this moment.
Buyback history at GAM
General American Investors routinely repurchases its shares from the market and it is a practice that has been around for the company since March 1995. From the time the shares repurchase program was initiated, GAM has bought back at least 22.7 million of its common stock shares. For that, it has spent $652 million in buybacks and those buybacks have been done when stocks are trading at an average discount of 13% to the underlying asset value.
The latest data reveals that General American Investors’ net assets are valued in the proximity of $1.1 billion. That is applicable to the company’s 27.7 million outstanding common stock shares.
Besides the announcement of an extended repurchase program, General American Investors also declared a dividend of $0.371875 per share on its Series B preferred stock. The dividend will be paid out on September 26 to shareholders of record as of September 7.