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FYI: (Click On Article Title At Top Of Google Search) Corporate stock buybacks are climbing toward a post-financial-crisis high this year, furthering the debate about the use of hundreds of billions of dollars in company cash to enhance quarterly earnings reports. Regards, Ted https://www.google.com/#q=Is+the+Surge+in+Stock+Buybacks+Good+or+Evil?
Depends on how well the company handles buybacks. I think many don't do it well.
Michael Kors (KORS) being a major recent example:
"But it was not KORS' operational issues that were troubling: it is how much the company burned on stock buybacks. In KORS' earnings release we read:
During the quarter, the Company repurchased 1,409,682 shares of the Company’s ordinary shares for approximately $92.0 million in open market transactions This means in the quarter ended March 31, KORS spent $92 million supporting its stock ahead of what it knew would be an earnings debacle. It also means that its average purchase price was $65.3/share in Q4, or 40% higher than KORS' last trade at $46.50.
But that's not all. Last quarter, after authorizing $1.5 billion for stock repurchases, KORS reported the following:
During the quarter, the Company repurchased 5,068,813 shares of the Company’s ordinary shares for approximately $399.9 million. In other words, KORS' average price in Q3 was $78.9, a 70% premium to the current market price."
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Michael Kors (KORS) being a major recent example:
"But it was not KORS' operational issues that were troubling: it is how much the company burned on stock buybacks. In KORS' earnings release we read:
During the quarter, the Company repurchased 1,409,682 shares of the Company’s ordinary shares for approximately $92.0 million in open market transactions
This means in the quarter ended March 31, KORS spent $92 million supporting its stock ahead of what it knew would be an earnings debacle. It also means that its average purchase price was $65.3/share in Q4, or 40% higher than KORS' last trade at $46.50.
But that's not all. Last quarter, after authorizing $1.5 billion for stock repurchases, KORS reported the following:
During the quarter, the Company repurchased 5,068,813 shares of the Company’s ordinary shares for approximately $399.9 million.
In other words, KORS' average price in Q3 was $78.9, a 70% premium to the current market price."
http://www.zerohedge.com/news/2015-05-27/when-stock-buybacks-go-horribly-wrong
KORS is event lower than that article, at $41 a share currently.
Fiserv is an example that's done it well:
https://ycharts.com/companies/FISV/shares_outstanding
http://stockcharts.com/h-sc/ui?s=FISV&p=W&b=5&g=0&id=p65737191659
29 consecutive years of double-digit adjusted EPS growth
http://newsroom.fiserv.com/fastFacts.cfm
A lot of that stuff needs to be reinvested in future capacity, not short-term gains for shareholders.
The GMO team has written on this stuff quite a bit, and I've found if pretty convincing.