BANKING / FINANCE : Fidelity National Financial to Launch Buyback Plan to Increase Stock’s Value
Executives at Fidelity National Financial can’t figure out why Wall Street isn’t treating their company better, and they hope a stock buyback plan to reduce the amount of shares in the market will make the firm more attractive to investors.
On Tuesday, the Irvine title company posted its best fiscal first quarter ever--$747,000 in net income for the three months ended Jan. 31, in what is usually the most difficult quarter for title firms.
Wall Street only yawned, paying $9.75 a share for the stock at Tuesday’s close, up $12.5 cents from Monday. The price--barely $2 a share more than Fidelity’s book value, hasn’t moved much, said Frank P. Willey, Fidelity’s executive vice president and general counsel.
Willey also said some former executives who left the company with chunks of stock after a management-led buyout in 1984 have been selling their shares on the open market for personal reasons. Their sales have been satisfying demand by providing the market with all the shares needed by new investors, he said.
So the company plans to launch a buyback plan this week in an effort to boost the share price. Under terms of the so-called Dutch auction, the company will buy back up to 7% of its stock at between $9 and $10 a share. The price paid to selling shareholders will depend on the cost to the company of acquiring the last of 250,000 shares purchased. The Dutch auction will run for six weeks.
“We are experts in title insurance and we think we’re a best buy right now,” Willey said. But he doesn’t expect any takeover threats because the board controls a majority of the company stock. William P. Foley II, Fidelity’s president and chief executive, owns about 37% of the shares. No one else owns more than 5%.
