No. of Recommendations: 4
That really did work out amazing well for GGG, considering where the share price was at the time.
JustPlainHokie


Can't say I like it! :(

5. On July 2, 1998, the Company repurchased 5,800,000 shares of common stock, for $190,887,000, from its largest shareholder, the Trust under the Will of Clarissa L. Gray, pursuant to an agreement executed in May 1998. The stock repurchase was funded with cash of $32,887,000 and $158,000,000 from the credit facility discussed below.

http://preview.tinyurl.com/yudxtv

I guess the market didn't like the idea, the share price dropped from $34.19 on June 29, 1998 to $20.56 on October 5, a drop of over 60%

http://finance.yahoo.com/q/hp?s=GGG&a=00&b=1&c=1998&d=00&e=1&f=1999&g=w

They essentially borrowed the entire net worth of the company to accommodate a founder. To me that sounds like criminal behavior. A lot of people put up Warren Buffett as the poster child of investing. Well, he refuses to buy back shares except when they are offered as a real bargain. What price did GGG pay for the shares?

$32.91, just 4% under the market price on June 29 and lets not forget the interest that they had to pay subsequently on the loan. To me that sounds like criminal behavior.

In 1998, interest expense, net of interest income, increased to $5.4 million due to the borrowing incurred to fund the repurchase of 5.8 million shares of Graco Inc. common stock from the Trust under the Will of Clarissa L. Gray.

http://preview.tinyurl.com/2oqz5t

That's a dollar a share in interest in 1998 alone!


Denny Schlesinger
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