Todd Sullivan on Capital Allocation and Buybacks

We had the pleasure of sitting down with Todd Sullivan, general partner of Rand Strategic Partners, in Boston. One of Todd’s favorite ways to generate investment ideas is to follow “cannibals” – CEOs that have been reducers of their companies’ share count on a consistent and material basis.

Todd also writes a highly instructive blog at ValuePlays.net that features his ideas and commentary on value investing topics.

The following transcript has been edited for space and clarity.

MOI Global: Tell us a bit about what piqued your interest in investing and, specifically, looking for companies that have great capital allocation and know when to buy back shares?

Todd Sullivan: Since I was eighteen, I’ve always either owned a business or have been investing in them, so to me value investing was a natural offshoot of being an owner of a business. Whether you’re buying a mobile station or a hardware store, you’re looking for the same features as you would if you’re buying stock in an oil company or a hardware store company. It was a natural progression to go from owning a business to investing via a value approach.

I’m a patient investor. I don’t have the skillset of a trader — in and out of things — I’ve always enjoyed the story of the stock, finding out, is this a good buy? Why is it a good buy? What specific things make it attractive to me, and is it at a good price, and then buying it and watching it realize the value that’s there.

MOI: Tell us a bit about some of the ways you generate ideas focused around that concept of capital allocation and share buybacks.

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