Is Krispy Kreme Doughnuts (KKD) About to Throw $50 Million in the Fryer?

Sure enough, shares of iRobot Corporation (NASDAQ:IRBT) have risen 85% since then on the heels of a great follow-up quarter, which beat even iRobot’s lofty expectations, and this thanks to the strong performance of its fast-growing consumer segment. However, while I continue to hold my shares of iRobot today, if the company came out now to announce a fresh repurchase program on top of its existing authorization, I’d be forced to respectfully disagree with their decision.

Or take Warren Buffett, who told investors last year he’d be willing to repurchase shares of Berkshire Hathaway Inc. (NYSE:BRK.A). The catch? He would do so only if the stock was trading below 1.2 times book value — the price at which he believed it represented a fantastic bargain. In fact, last December, he did just that by repurchasing $1.2 billion in Berkshire stock at around 1.16 times book value from the estate of an unidentified longtime investor.

And you know what? If Buffett had it his way, he would have bought it even cheaper; remember, that self-imposed limit of 1.2 times book was actually raised from Buffett’s previous limit of 1.1, which he says simply proved an unrealistic level at which nobody was willing to sell.

Foolish takeaway
Long story short, though buybacks can create shareholder value when executed at the right price, I have to agree with fellow Fool Sean Williams, who asserted last year that, by and large, investors generally get duped by most share repurchase plans.

In the end, then, while I’d love to give Krispy Kreme Doughnuts (NYSE:KKD) the benefit of the doubt, I just can’t get behind this buyback.

The article Is Krispy Kreme About to Throw $50 Million in the Fryer? originally appeared on Fool.com and is written by Steve Symington.

Fool contributor Steve Symington owns shares of iRobot . The Motley Fool recommends Berkshire Hathaway and iRobot . The Motley Fool owns shares of Berkshire Hathaway.

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