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Politicians And Twitter May Hate Buybacks. But Institutional Investors Don't.
"But pension funds, endowments, and other institutional investors represent the vast majority of public company shareholders—and, according to a recent study, these investors view buybacks as among the best actions management can take when it comes to allocating capital."
I think this is a crock of crap. I contend Management uses this to line their nest.
"But pension funds, endowments, and other institutional investors represent the vast majority of public company shareholders—and, according to a recent study, these investors view buybacks as among the best actions management can take when it comes to allocating capital."
I think this is a crock of crap. I contend Management uses this to line their nest.
Of course they do.
For most of the 20th century, stock buybacks were deemed illegal because they were thought to be a form of stock market manipulation. But since 1982, when they were essentially legalized by the SEC, buybacks have become perhaps the most popular financial engineering tool in the C-Suite tool shed. And it’s obvious why Wall Street loves them: Buying back company stock can inflate a company’s share price and boost its earnings per share — metrics that often guide lucrative executive bonuses.
In an exhaustive financial analysis of buybacks [see link below], the consultancy McKinsey found that companies would generally be better off issuing dividends or increasing investment instead. Buybacks also might distort earnings-per-share calculations and other measures of profitability and value.
Comments
I think this is a crock of crap. I contend Management uses this to line their nest.
Also: Are Stock Buybacks Starving the Economy?, The Atlantic (July 21, 2018)
https://www.theatlantic.com/ideas/archive/2018/07/are-stock-buybacks-starving-the-economy/566387/ https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/how-share-repurchases-boost-earnings-without-improving-returns
Lets Hear an Amen