100Baggers

STOCK BUYBACKS: ACCELERATE RETURNS 119
finely-run companies the opportunity to purchase portions of their
own businesses at a price under 50% of that needed to acquire the
same earning power through the negotiated acquisition of another
enterprise. (emphasis added)
When done right, buybacks can accelerate the compounding of returns.
Stock buybacks have only become more common in the last couple
of decades. Therefore, in my study of 100-baggers—which spans 1962 to
2014—it was not a common tactic. But those who were diligent buyers of
their own stock had spectacular results, as we saw in chapter 8 with the
Outsiders.
It’s a potential clue. When you find a company that drives its shares
outstanding lower over time and seems to have a knack for buying at
good prices, you should take a deeper look. You may have found a candidate
for a 100-bagger.