Share buy backs are not the best option for shareholders.A special dividend pay out would be a better option.When a company buys back its shares at high prices it does nothing for the long term share holder. A reduction of the size of the float is good but share buy backs are short term actions which only give short term results.The share price went up when they announced they were purchasing billions of dollars of future assets and now the share price goes up when they announce they are liquidating billions of assets?. This would be better if we knew why they had to sell these assets.In the near future maybe the questions will be answered and the share price will reflect the direction that this companies Directors are taking it,good or bad.
your right about share buy backs. If the best option for investment is buying shares then give it back to the owners...the shareholders. often times however, share buy backs support stock options of management enabling them to convert what should be ordinary income into a capital gain which lower the tax bill of there compensation. I hate buy backs because they are good for the shareholders over the long term.
wrong ... buy back share when they are undervalued relative to the company intrinsic value ei $125 per share . thus capitalizing on the LOW price of the shares .. and lower float raises earning per share and potential expansion of PE
This is absolutely incorrect. Share buyback increases the value of each remaining share remaining in the market. The increase in value is taxed as a capital gain whenever you decide to sell. Dividends are always taxed at a much higher rate, putting less money in your pocket.
WSJ May 5 article, "Stock Buybacks Propel Executive Bonuses," suggested the primary effect of stock buybacks is to facilitate attainment of compensation targets tied to per-share earnings, increasing many executives' pay.
Article gave example of Safeway CEO who received a $2.3 million stock award based on a 61% jump in the company’s per-share profit last year, but the earnings increase didn’t come from the grocery chain’s sales, which barely budged, or from squeezing out more profit as its operating margin narrowed. The difference was $1.2 billion in stock buybacks, mostly financed with borrowed money. Reducing the number of shares lifted per-share earnings growth by about half, improving a metric used to determine the CEO’s incentive pay.
the key difference here is apa is NOT using debt to do buyback rather assets sale which mean they believe the assets are not getting value in market price of stock .. OK if price of stock low ... but it with your own asset and expand PE withour offset debt .. good biz