Buyback Wednesdays – A Net-Net Biotech Announces A Large Buyback

With earnings season mostly behind us, buyback announcements also declined with a total of 18 companies announcing stock buybacks this week compared to 38 companies in the prior week. The top buyback is a nano-cap company with a market cap below $50 million that also happens to be a net-net. A net-net is a company where its market cap is less than current assets minus total liabilities.

Tonix Pharmaceuticals (TNXP) announced a $12.5 million buyback yesterday that represented more than a fourth of the company’s market cap at announcement. The company is a clinical-stage biotech that has one Phase 3 candidate for Fibromyalgia in its pipeline. The same drug will also enter Phase 2 trials as a potential treatment for Long COVID in Q2 2022. Beyond Fibromyalgia and Long COVID, the company also targets other central nervous system disorders and infectious diseases.

Tonix CNS Pipeline

Tonix was recently granted a patent for its synthetic horsepox virus, which forms the basis for the company’s platform targeting monkeypox, smallpox and COVID-19. The stock is up more than 50% today as I write this, driven as much by the buyback announcement as the grant of this patent. This pre-revenue company is down more than 90% over the last year and burnt through more than $140 million in cash over the last four quarters. Despite this level of cash burn, the company has $140.4 million in cash on the balance sheet and only $15.8 million in liabilities. Considering the high level of cash burn, this stock buyback announcement is even more surprising than seeing home builders announce buybacks. Speaking of which, we have yet another home builder on our list with Taylor Morrison Home  (TMHC) announcing a $250 million buyback.

With oil prices heading up once again, energy companies like Laredo are generating significant cash flows and are returning those earnings to shareholders through buybacks. Another interesting share buyback announcement this week was by one of the nation’s largest baked goods company Flower Foods (FLO), the company behind brands like Nature’s Own, Dave’s Killer Bread and Wonder. The stock of this low growth, low margin business isn’t exactly cheap and the company has $697 million in net debt on the balance sheet after excluding capital leases. It might make more sense to use excess capital to reduce debt or grow through acquisitions.

Welcome to edition 9 of Buyback Wednesdays, a weekly series that tracks the top stock buyback announcements during the prior week. The companies in the list below are the ones that announced the largest buybacks as a percentage of their market caps. They are not the largest buybacks in absolute dollar terms. A word of caution. Some of these companies could be low-volume small-cap stocks with a market cap below $2 billion.

Top 5 Stock Buyback Announcements 

1. Tonix Pharmaceuticals Holding Corp. (TNXP): $2.44

On May 31, 2022, the Board of Directors of this clinical-stage biopharmaceutical company, approved a new share repurchase program authorizing the company to repurchase up to $12.5 million of its class A common stock equal to nearly 27.3% of the common shares of the company. 

Market Cap: $45.73M Avg. Daily Volume (30 days): 3,754,164 Revenue (TTM): N/A
Net Income Margin (TTM): N/A ROE (TTM): -50.95%  Net Cash: $139.64M
P/E: N/A Forward P/E: N/A EV/EBIDTA (TTM): N/A

2. Laredo Petroleum, Inc. (LPI): $84.17

On May 31, 2022, the Board of Directors of this independent energy company approved a new share repurchase program authorizing the company to repurchase up to $200 million of its class A common stock equal to nearly 13.7% of the common shares of the company. 

Market Cap: $1.41B Avg. Daily Volume (30 days): 740,343 Revenue (TTM): $1.68B
Net Income Margin (TTM): 7.97% ROE (TTM): 75.26%  Net Debt: $1.35B
P/E: 5.61 Forward P/E: 1.97 EV/EBIDTA (TTM): 6.43

3. Flowers Foods, Inc (FLO): $27.60

On May 26, 2022, the Board of Directors of one of the largest producers of packaged bakery foods in the U.S., approved an additional share repurchase program authorizing the company to repurchase up to $551.40 million of its class A common stock equal to nearly 9.4% of the common shares of the company. 

Market Cap: $5.80B Avg. Daily Volume (30 days): 1,681,366 Revenue (TTM): $4.46B
Net Income Margin (TTM): 4.93% ROE (TTM): 15.32%  Net Debt: $1B
P/E: 27.32 Forward P/E: N/A EV/EBIDTA (TTM): 13.88

4. Ashland Global Holdings Inc. (ASH): $107.02

On May 25, 2022, the Board of Directors of this global speciality materials company, approved an additional share repurchase program authorizing the company to repurchase up to $500 million of its class A common stock equal to nearly 9.09% of the common shares of the company. 

Market Cap: $5.89B Avg. Daily Volume (30 days): 322,775 Revenue (TTM): $2.25B
Net Income Margin (TTM): 42.55% ROE (TTM): 5.39%  Net Debt: $500M
P/E: 34.23 Forward P/E: 19.23 EV/EBIDTA (TTM): 13.01

5. Taylor Morrison Home Corporation (TMHC): $28.97

On May 31, 2022, the Board of Directors of this homebuilder and developer approved an additional share repurchase program authorizing the company to repurchase up to $250 million of its class A common stock equal to nearly 7.25% of the common shares of the company. 

Market Cap: $3.45B Avg. Daily Volume (30 days): 1,149,836 Revenue (TTM): $7.79B
Net Income Margin (TTM): 9.53% ROE (TTM): 19.57%  Net Debt: $2.57B
P/E: 4.72 Forward P/E: 3.19 EV/EBIDTA (TTM): 5.86

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