How can you take issue with a big dividend, with a 50% payout? How can you disagree with that?
That's not me talking, it is Chris Viehbacher, the transformative CEO of Sanofi (SNY) talking about what real investors want, not hedge funds.
Chris likes to do "Mad Money" because he knows that the viewers are people who don't flit. He is looking for people who want to have a stake in his company and own it for the long term. When he goes on the road to court investors, as he did this last week, he is always surprised at the two different kinds of owners he has, the hedge funds who want to have a big buyback and the long-term owners, including individuals, who want steady growth -- he has it in spades -- and a nice return from a dividend that they can reinvest.
He used my favorite word on the issue: empirical. He has studied the data and he knows what works.
Why is it that managers so often don't get this? I think they spend too much time going to conferences and speaking to hedge funds and don't realize that the reason that a lot of these funds want buybacks is so they can blow out of the stock at a moment's notice.
Chris gets that. While he has bought stock back opportunistically, he doesn't want to play the market and he doesn't want to try to figure out when his stock is high or low. He just wants to give a nice balance of income and growth.
To which I ask: is that so hard? Why can't people see that a company like Sanofi, which has done wonders to smooth over a Plavix-related patent cliff by buying the fast-growing Genzyme, emphasizing animal health, vaccines, and diabetes and selling more into emerging markets where the government isn't the biggest payer, has it right?
Now the stock has been knocked back because of the euro and because it is a French stock caught up in French indices. That's not Chris's fault.
But he's done the right thing. It's a terrific stock to buy here for the long term, knowing that European problems pull it down but a great long-term mosaic of drugs and a terrific pipeline coupled with that bountiful dividend will make the stock outperform over time.
Good attitude, not shared by many execs, particularly in his industry.