Should Tempur-Pedic Really be Bragging about Buybacks?: Greenberg

I suppose you can say this for Tempur-Pedic: At least they live by the “if you liked it at $70 you’ve gotta love it at $20” rule.

The company issued an 8-K today to confirm it’s “actively” buying its own stock in the open market.

Sounds great, except Tempur-Pedic doesn’t exactly have the best record at buying its shares. Last year, it bought 6.5 million of its shares for $368.5 million, or an average price of $56.69 (part of it funded with debt).

In the first quarter it bought another 169,000 shares for $12.3 million, or around $73 a share.

Today? It’s around $24.

So much for bargains.

P.S.: I can hear it now: The company has a great track record buying its stock at a bargain after purchasing 8.5 million shares in 2010 for $250 million, or $29.41—well below its peak of nearly $90 in April. Just one problem with that argument: The stock had sunk to the mid-single digits in 2009, after getting hit by the recession and financial crisis.

This time, based on its own admission, it’s getting clobbered for the first time by something more compelling—competition.

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