We have a choice: buybacks or bailouts. Buybacks are just a tax efficient method of transferring money from companies to their shareholders. That’s the reason why companies exist, to allow their shareholders to profit. The problem with buybacks is that they are easily gamed by
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company CEOs who issue stock options and have compliant boards. Shareholders, don’t understand this, do and hate it, or do and are okay with it because it increases their prices of their holdings. To do a buyback, the company needs to sacrifice cash or take on debt.
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Replying to @Molson_Hart
Buybacks don't change the price of the stock, they should be neutral. Doesn't increase or decrease shareholder value (if it does, then the company was severely mismanaging their cash such that $1 on the books is worth *less* than $1 in market cap)
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They do, but in theory they shouldn't because in order to execute the buyback, the company must reduce its cash. When it reduces its cash, it is reducing the value of the enterprise which includes its cash.
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