audreyh1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Today's Walmart stock buyback announcement struck me, as it occurs in a heady market, and when Walmart stock is already close to 52-week highs, and not that far off from 5 year highs.
It seems so frequent that companies buy back their stock when the market is running up and at new highs. And then "whoosh" that cash is wiped out in the next downdraft. I remember a lot of buybacks in the 2006-2007 run up, then bam!
2015 had a large number of buybacks as debt was so darn cheap. That's a mechanism for low interest rates converting to asset inflation right there. Financial engineering. Alternatives - invest in the company (ok, out of ideas?) and increase the dividend, or even do occasional special (one-time) dividends.
I also expect cash from repatriation of foreign assets and lower corporate tax rate will go right into stock buybacks. These just seem irresistible.
Now - when a company has been beaten down for some reason, including a bear market, and has a lot of cash - then a buyback can make great deal of sense. Best bang for the buck.
But usually - they are just more than annoying and usually a way to transfer wealth from the current shareholders to company management. Share buybacks: What they are and why they may not work - Business Insider
Oh, wow - I didn't know buybacks were illegal until 1982!
Walmart announces $20 billion buyback to boost its stock price - Business InsiderWalmart is sweetening the pot for shareholders before its annual meeting, using the oldest trick in the book.
The retailer on Tuesday morning announced that it had authorized up to $20 billion in stock buybacks over the next two years. That's a massive amount of capital to be allocated for repurchases, which are frequently used by companies to boost shares during times devoid of other positive catalysts.
It seems so frequent that companies buy back their stock when the market is running up and at new highs. And then "whoosh" that cash is wiped out in the next downdraft. I remember a lot of buybacks in the 2006-2007 run up, then bam!
2015 had a large number of buybacks as debt was so darn cheap. That's a mechanism for low interest rates converting to asset inflation right there. Financial engineering. Alternatives - invest in the company (ok, out of ideas?) and increase the dividend, or even do occasional special (one-time) dividends.
I also expect cash from repatriation of foreign assets and lower corporate tax rate will go right into stock buybacks. These just seem irresistible.
Now - when a company has been beaten down for some reason, including a bear market, and has a lot of cash - then a buyback can make great deal of sense. Best bang for the buck.
But usually - they are just more than annoying and usually a way to transfer wealth from the current shareholders to company management. Share buybacks: What they are and why they may not work - Business Insider
Oh, wow - I didn't know buybacks were illegal until 1982!
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