Shrinkage vs. Growth

Looking over the same period (2005-2016) for other stocks in the S&P 500, we see a similar trend as we saw with Northrup. The 10% of stocks which have reduced their share counts by the greatest percentage since 2005—stocks like Autozone, Travelers, Coca-Cola Enterprises, AmerisourceBergen, or Fiserv—have done very well as a portfolio. On average, they’ve reduced share count by 47% and they’ve outperformed the S&P 500 by an average of 88%[iv].  What’s interesting is that this strong performance has happened despite the fact the median market cap and net income growth has been lower for these companies than for the average S&P 500 stock.

Source: Shrinkage vs. Growth

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s