Comments on: Stock Buybacks vs Performance

By: How the Common Man Sees It

How the Common Man Sees It — Fri, 27 Mar 2009 13:10:07 +0000

whether, or not, the funds were borrowed, the transactions reduce Cash, decrease flexibility in responding to \exogenuous/ shocks–which, do, happen.

Are you talking pre or current fed-will-lend-to-anybody-that-can-fog-a-mirror eras? ;)

By: Mark E Hoffer

Mark E Hoffer — Fri, 27 Mar 2009 12:09:11 +0000

“If you ask me the whole thing is a farce… when you buy back shares, logically the stock price should not go up. It should stay flat.”

actually, one could make the case that the shares should trade lower due to increased ‘costs’ of Event Risk.

whether, or not, the funds were borrowed, the transactions reduce Cash, decrease flexibility in responding to \exogenuous/ shocks–which, do, happen.

LSS: the ‘stock buy-back=good’-myth was created at the same skools that produce the ‘bankers’..
funny how it creates Corporate dependency on ‘Banks’, maybe it’s, just, a coincidence..

By: danm

danm — Fri, 27 Mar 2009 11:45:42 +0000

If you ask me the whole thing is a farce… when you buy back shares, logically the stock price should not go up. It should stau flat.

From the bottom line company perspective yes but from the trading side you are reducing the float and thus are (supposedly) changing the supply/demand fundamentals of the shares
————–
I know this is what happens but it makes no sense fundamentally. That is a great example of the market being inefficient at pricing the true value . When this happens, I know there will be a correction sometime down the road since stocks trade around their intrinsic value.

By: BlankReg

BlankReg — Fri, 27 Mar 2009 06:17:27 +0000

I expect to see a correlation between stock buybacks and large insider sales.

By: How the Common Man Sees It

How the Common Man Sees It — Fri, 27 Mar 2009 04:56:18 +0000

@matt Says: March 26th, 2009 at 3:19 pm and various others re: dividends

I agree wholeheartedly. Give me the dividend and a good drip plan and let me decide if company cash is to be used for share buybacks

@danm Says: March 26th, 2009 at 8:02 pm

If you ask me the whole thing is a farce… when you buy back shares, logically the stock price should not go up. It should stau flat.

From the bottom line company perspective yes but from the trading side you are reducing the float and thus are (supposedly) changing the supply/demand fundamentals of the shares

By: karen

karen — Fri, 27 Mar 2009 04:30:51 +0000

oh, phx, don’t tease me. i’m just an idiot that is able make money… dumb luck.

By: usphoenix

usphoenix — Fri, 27 Mar 2009 03:56:18 +0000

@karen: spoken like a true trader.

By: karen

karen — Fri, 27 Mar 2009 02:40:59 +0000

Andy, i agree completely with your opinion on stock buybacks, 98% of the time on that is the case. but 2% of the time, a stock gets manipulated or driven down because of unprecedented market conditions, and then I’m all for it. Of course, I’m referring to the price getting driven to near zero…

By: TPC

TPC — Fri, 27 Mar 2009 01:57:39 +0000

Contrarian indicator methinks….

By: Andy Tabbo

Andy Tabbo — Fri, 27 Mar 2009 01:49:36 +0000

This is probably my single largest irritation with public companies–buying back their own stock. 80-90% of the time it’s the WORST use of cash. When a Board buys back their own stock, they’re basically saying:

“We’ve analyzed many different investment opportunities around the world, and we’ve decided that our stock, among all the stocks in the world, is the very best stock to buy. Therefore, we are NOT going to dividend the cash to shareholders to make their own decisions. We’re going to buy our own stock.”

It’s simply ridiculous. All in an effort to appease Wall St.’s finest and goose the EPS.