(By David Fried, editor The Buyback Letter)
Our recommendations center on a collection of stocks that we believe, as
a group, will outperform the market this month. Our Buyback Premium
Portfolio is up 71.17% since inception in 2000 vs. a decline of 1.52% in
the S&P 500 over the same time frame.
Here's a look at four stocks we have added to our model portfolio, each operating in the financial sector: American Capital Ltd. (ACAS), SLM Corp. (SLM), Lincoln National (LNC) and Dun & Bradstreet (DNB).
American Capital is a private equity firm and global asset manager investing in private equity and real estate.
its August 1997 IPO, American Capital and the funds it manages have
invested about $31 billion in more than 540 portfolio companies, in
virtually every industry sector. It has 90 investment professionals in 8
offices in the U.S. and Europe.
As a publicly traded company,
American Capital offers shareholders an opportunity to invest in
privately held middle market companies through ownership of its stock.
is known as a business development company, or BDC. These companies
make money by financing small private companies. They mainly invest in
debt securities with the goal of generating income, but sometimes
they'll also invest in warrants, preferred, and/or equity securities as
ACAS has experienced volatility in the last few years,
nearly collapsing in the first 2 quarters of 2009 as the economy tanked.
The company was able to reverse its decline in the last quarter of
2009, and has been steadily climbing uphill since then. In the last 12
months, management has reduced shares outstanding by 8.4%.
more commonly known as Sallie Mae, is the nation's No. 1 financial
services company specializing in education. It originates, acquires,
finances, and services private education loans in the U.S.
Mae provides financial services to hundreds of college campuses as well
as to federal and state governments, although it is not sponsored by or
an agency of the U.S.
SLM has a market cap of $7.91 billion and
is part of the financial services industry. The company has a P/E ratio
of eight, below the S&P 500 P/E ratio of 17.7. Shares are up about
28% year to date.
Analysts praise the company for solid stock
price performance, an impressive record of earnings per share growth,
compelling growth in net income, notable return on equity and attractive
Management has reduced shares outstanding by 9.1% in the last 12 months.
last bought Lincoln National in October and sold it a month later for a
quick and tidy 3.11% gain. We had previously owned it for 3 months in
2010, and reaped a 15.05% gain from it at that time.
Lincoln is a
seller of life instance and annuities and a Fortune 200 American
holding company, and has multiple insurance and retirement businesses in
the U.S. With headquarters near Philadelphia, it had assets under
management of $174 billion as of September 30, 2012.
announced it was hiking its dividend by 50%, to 12 cents a share.
Analysts believe the company's strengths can be seen in solid stock
price performance, increase in net income, revenue growth, attractive
valuation levels and growth in earnings per share.
In the last 12 months, management has reduced shares outstanding by 8.8%.
Dun & Bradstreet
and consulting company Dun & Bradstreet is the world's leading
source of commercial information and insight on businesses.
entire business is built on collecting, aggregating, editing and
verifying information from thousands of global sources every day. Its
commercial database contains more than 215 million business records.
the past few years, the $3.5 billion company has evolved from
delivering reports to helping customers increase revenue, identify
savings and drive growth and profitability.
It generates large
cash flows, successfully dodged "The Great Recession" (because it has a
unique asset to which other companies are compelled to pay for access),
has recent growth initiatives (with the potential to leverage its vast
knowledge of U.S. businesses into revenue from the Asia-Pacific area),
and a robust share buyback program.
In the last 12 months, management has reduced shares outstanding by 8.2%.