Check Point Software Technologies Ltd. (Nasdaq: CHKP), managed by CEO Gil Shwed, last week announced the extension of its program for buying back its shares. The program enables the company to spend up to $250 million a quarter on buying back its shares. Check Point has carried out this program to almost the fullest extent in recent quarters, spending an average of $247 million a quarter on its buyback. Check Point said that its buyback would be through deals on the open market or private deals, subject to market conditions, the share price, trading volumes, and other factors.
According to Check Point's figures, it has bought 145 million of its shares for $6.3 billion since it began its buyback program in 2003, reflecting an average price of $43.50 per Check Point share, compared with the current market price of $106.
The bulk of Check Point's purchases have been in recent years. A check by "Globes" shows that between early 2012 and mid-2017, Check Point bought 60 million of its own shares for over $4.2 billion (an average share price of $71).
As of the end of the second quarter, Check Point had $3.8 billion in cash. While the company does not rule out acquisitions of companies, its most recently acquisitions were in 2015, and those were modest: Israeli startups Hyperwise and Lacooon for tens of millions of dollars each. It appears that Check Point has decided that the best investment for it today is in its own shares.
Shwed's holdings grow, worth $3.2 billion
Check Point's buyback is helping the company in several ways. First of all, it signals to the market that the company's management believes in its share and the attractiveness of its price. Secondly, it reduces the number of shares, which has the effect of increasing the net profit per share.
One byproduct of Check Point's massive buyback concerns the holdings of its biggest shareholders, headed by Shwed. While the number of shares owned by Shwed has remained almost unchanged in recent years at 31-32 million, the reduction in the total number of shares has increased Shwed's stake in Check Point from 15% seven years ago to 17.8% at the end of 2016. The value of Shwed's holdings in Check Point has now reached $3.2 billion.
The next largest shareholders in Check Point after Shwed are the Massachusetts Financial Services Company, which owns 7.7% of the company's shares with a current market value of $1.3 billion, and Check Point chairman Marius Nacht, who cofounded Check Point with Shwed. Nacht has a 6.8% stake, with a current market value of $1.2 billion, after selling half of his holdings in the company during 2016.
Published by Globes [online], Israel Business News - www.globes-online.com - on August 14, 2017
© Copyright of Globes Publisher Itonut (1983) Ltd. 2017