Exactly a year ago, I wrote up a little company whose strategy has pivoted to a slow liquidation while eating its own shares. It barely grows. It runs a dull, cash-generative business, takes the cash, and buys back its own stock hand over first, with roughly a third of the company retired in three years. By my calculation, it traded at a 13% FCF yield then and continues to trade at a 15% yield today.
It put out its Q22026 earnings yesterday and the stock has fallen 11% between yesterday and today. Core operations looked fine and growing to me, so I spent some time in the transcript and the MD&A working out what the market sees. The way I read it, the market has taken a few ordinary things and added them up into one bad number, and I’m still taking the other side.