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DIRECTV (DTV) continues aggressive buybacks.

DTV announced a $4 Billion buyback today, which is about 13.5% of DTV’s market cap.

http://www.reuters.com/article/2013/02/14/us-directv-results-idUSBRE91D0QC20130214

Since 2005, DTV has been buying back shares as aggressively as just about any company I’ve ever come across.

In 2006 they bought back 8.9% of shares outstanding

In 2007 they bought back 5.3%

In 2008 they bought back 7.3%

In 2009 they bought back 10.9%

In 2010 they bought back 11.7%

In 2011 they bought back 14.2%

In the trailing 12 months, they’ve bought back 11.1%

*all data from morningstar

This most recent 4B buy back is 13.5% of DTV’s market cap at current prices. That would lower the number of shares outstanding to just 578 million!

DTV has lowered the share count from 1.395 billion in 2005 to what will probably be about 578 million by the end of 2013. That’s an annualized rate of 10.4%! That’s insane!

Also, over the past 4 years DTV has generated between 2.0 and 2.8 billion in free cash flow. ($2.3 B in ‘09, $2.8B in ‘10, $2.0B in ’11, and $2.4B in TTM)

If we assume that DTV will generate between $2.0B and $2.8B of free cash flow again in 2013, that would be result in free cash flow per share between $3.46 and $4.84. That’s a 7%-10% free cash flow yield at today’s prices, and I think that’s very attractive for a company that makes up half of a duopoly (DISH being the other) Of course, if DTV actually grows going forward, which it should based on the previous 10 years of data, then that free cash flow yield would be even higher.

I think these buybacks are a big part of why Todd or Ted has been buying DTV shares for Berkshire Hathaway’s portfolio. I find DTV highly attractive at this time. I’ve up thumbed DTV in CAPs and am considering initiating a real life position.

What are your thoughts on DTV?

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