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Smith & Wesson Holding Corporation Message Board

  • rharris1975a rharris1975a Jul 30, 2014 4:06 AM Flag

    I still don't get it, how do SHARE BUY BACKS HELP US

    I posted a message within the last month or two but I could not find it to bump it so I'll start this new one. I read all the explanations about how it reduces the number of shares, it makes the EPS "look better", but I still don't see how it helps US, WE THE INVESTORS. Does it put money in our pockets? From what I understood, NO.

    Does it reduce the shares? Yes. Does this mean fewer shares, sure, but how does this HELP US? So what if there are 40 million shares instead of 55 million shares. How does this materially affect the investor?

    What is the concrete way this helps us? That never really was explained despite all the words and fancy talk. In other words, what do share buybacks have to do with the price of provalone in China? HOW do I see the benefit, to me, the investor?

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    • You should finsih your education! At least get your GED!

    • If you have a basic understading of economics, this is quite easy to explain. With a share buy back, the number of outstanding shares decreases. This means that the SUPPLY of shares decreases. If the DEMAND increases or even stays constant due to the decrease in supply, this will still result in a higher price of goods (or in this case, the share price will rise). Share buybacks are almost always good for investors except in the cases where a company will do a share buy back just to pad it's price per share instead of reinvesting money in business capital to increase growth.

    • kmulhair@sbcglobal.net kmulhair Aug 27, 2014 10:48 AM Flag

      And look at the intelligence of Management. They bought shares at a higher price than it is now! Doesn't make a whole lot of sense to me! Not the type of leadership I would invest in. Based on their performance, they are probably buying equipment for expansion when there is a glut of inventory and they should be shuttering operations for a month and furlough employee's until the glut is gone.

    • Do you understand what EPS stands for? Earnings per share...it doesn't just make it look better...it simply is better. Everyone who owns a share gets a bigger piece of the pie. Maybe you're diabetic and still don't understand. You get more of the bacon that is on the hog. It will put more money in our pockets when we sell or when a divvy is paid. If you have $100 to pay in divvy, but you split it between 200 people, it's only .50 cents per person. If you only have to split it between 100 people everyone gets $1, which is a 100% increase in the dividend payment. The lower the stock price gets directly affects the number of shares that will come off the table with the buyback money. Did you own the stock when it was at $10? Debney announced a buyback and it quickly went to $11...boom...10% in your pocket...if you would have sold at $17 it would have been 70% in your pocket. Most importantly, you have to own/invest before you can realize these gains. We're still up almost 30% from the initial buyback. If Debney can trim another 20% of outstanding shares, you can assume a 20% increase in share price. The market is currently hunting for the floor/baseline for RGR and SWHC. We all know that sales won't be what they were during Obamageddon. What is normal now for these two companies and which is gaining or losing market share? Market share will be a big piece of the future puzzle.

    • Does it reduce the shares? Yes. Does this mean fewer shares, sure, but how does this HELP US? So what if there are 40 million shares instead of 55 million shares. How does this materially affect the investor?

      I can see your LOGIC !
      Think of the company as a Pizza Pie and each cut is a share. Usually I can eat a whole pie which is 10 pcs. or 10 shares but yesterday I had to tell Papa John's to cut the pie into only 5 pcs. because I wasn't that hungry and couldn't eat 10pcs. !

    • Your a moron - understand know???

    • You shouldn't call yourself an investor if you ask this question. Do the math.

      • 2 Replies to tjpatroit
      • Another way to put this tj, is a request, I request that YOU DO THE MATH for me, and show me the money. Seriously, show me the math and how the buybacks have helped put money in my pocket. I don't mean "theoretical value" which means nothing if nobody is going to pay what we think a stock is worth, I mean REAL VALUE that puts real money in my pocket. Where's the money? We have had share buybacks, is my stock worth more? My math says that going from $17 to $12 isn't a good thing. This is part of my point I'm trying to make.

      • tj, due to the fact that I stayed in Smith and Wesson when I could have sold at $17.28 or the $17's, you bet, I am NOT calling myself an investor, I F'd up big time but I took my chances. If you too followed this stock down from $17 I certainly hope you are not calling yourself an investor.

        Also, I do understand what a share buyback is and how it works, I just don't see how it is benefiting us, the investors, there is no more money in my pocket, my stock is now worth tens of thousands of dollars less, so where's the beef? That's my point.

    • Investopedia "A Breakdown Of Stock Buybacks "

 
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