Most Share Buybacks Don't Pay Off for Investors

Before GM went bankrupt executives had bought back $40 billion in stock over ten years. When GM went bankrupt they had $40 billion in debt. They should have been paying down their debt but the execs wanted to juice the stock and their own pay.

Buybacks pay sellers. Dividends reward owners.

Didn't Peter Lynch tell us decades ago that when companies use their cash to buy back shares it's time to sell? if that's the "highest and best" use of their cash then I tend to agree. If they aren't using it to expand markets, modernize plants, R&D, etc., then dividend it to the owners (shareholders).

stock buybacks only help those that have gotten lower than market options... if the corporations really wanted to do something positive... they would increase dividends

Give me dividends and let me reinvest them how I want.

Folks, share buybacks have nothing to do with increasing share price. They are designed to increase bonus payouts to the upper level managment by increasing revenue and profit per share (same revenue, fewer shares). There is no correlation of share price to buybacks, a 100% correlation of increased bonuses to increases in revenue or profit per share

They are not for investors. They are for the management so they can give themselves more stock options every year. Management is constantly stealing company shares from the investors.

I make it clear to the world that stock buy-backs hurt the shareholder. The shareholder loses equity because what happens with the stock purchased is that it goes to the executives as stock options, thus an added expense that isn't realized instantaneously. The corporation is thus worth less, not more when all is said and done.

As much as I tell Bloomberg and other news agencies in trying to help those who think they are investing, they prefer to remain ignorant on the subject.

You can see on stock market realities blog (spot) site and even if you want fairness in this world, you can see the fair, highly stable, manipulation-resistant stock market system that was given to the SEC more than a year ago that's in the book "God Gave You a Brain; Use It!" Evidently the SEC likes the unfair system instead of one that would be great for investors. In today's market, it's not about investing, but more akin to musical chairs and manipulation. By the way, day-trading would not work in this new system. Trading volume would be just a few percent of what it is today. So now you can see who will lose and would want to prevent this from being instituted. The money changers who thrive off of skimming money from you every day would need to seek some other illegitimate occupation.

CBS buys back shares, and then awards them to the executives. In 2011, officers sold over 3 million shares, and purchased zero, zilch. They sold shares that were awarded them. In january Moonves sold 300,000 shares, giving him over 8 million dollars. He sells hundreds of thousands of shares every month, which he was awarded.

they only pay off for insiders. issue debt. take the cash do a buyback. increase EPS insiders with boat loads of options go ca ching.. duuuhhh

YES. But how can we tell the management? In all cases they should just give us dividend.

The real purpose of stock buybacks is to prevent dilution of stock value caused by large option grants to executives. In other words, they hide the damage done to shareholders by excessive executive compensation.

Stock buyback is a horrible idea. As a shareholder, I would prefer that you dividend out the excess cash, even if I'm going to be taxed on it at a higher rate or if it would make dividend payments uneven. Management should not presume to know better than I do about how best to deploy those excess funds. But then again, Management's incentive is on their stock option so there's a vested interest in hording the cash. A one-time dividend or an inconsistent dividend payment, even though it would benefit stockholders, would hurt stock price.

Buying 2 shares x $1 adds more value then 1 share x $2. Buying back an overvalued stock props up EPS so that exec's can hit their targets and collect their bonuses but does not add value. Buying back an undervalued does add value. Don't let anyone tell you that price is not the issue. It's the only issue.

as a shareholder i would rather for them to give the shareholder the money instead of stock buy backs

I am amazed. I thought everyone was so dumb to this stock buy-back stuff. Apparently some of you know exactly what it's used for. It gives the executives more money off the backs of those who think they are investing and decreases the float to make it look like their earnings per share is higher.

You are constantly being swindled. You should all see the fair stock market system in "God Gave You a Brain; Use It!" book. This is what we need. Bernanke should not be allowed to interfere in the free markets. It would also get rid of program day trading since no longer would prices move.

I think if they used the money to increase their dividends that this would be good for shareholders and likely drive stock prices up.

It helps fuel our record wealth divide as the executives are able to legally steal through giving themselves all the stock options they want from these purchases.

well now not all buybacks are the same it depends on the management.

if the management has a history of issuing new stock and issuing options for themselves.

then buybacks are trash.

BUT if the company is disciplined and do not do that then all is well.

buybacks are bad if they use those as an excuse to give themselves massive bonuses.

AHEM 99% of usa listed companies on wallstreet especially goldman sucks and banksters that do this is bad bad bad.

research the history of the company and how they operate.

dividends are taxed so buybacks are usually better from a tax stand point.

BLAME GOV taxing div then.

it is double taxation revenue then tax on us for div.

thus buybacks are only taxed one time not twice.

from a tax stand point buybacks are better.

BUT it all depends on people managing it.

DO YOU trust them to manage it?

ONLY trust buybacks if you trust the management.

TOO bad 90% ceos based in usa are trash. and are ripping shareholders off.

look elsewhere for investment if they do buybacks based in usa and paid over 1 million bucks + bonuses.

if they get bonuses in options look elsewhere.

if they dont buy the stock themselves look elsewhere.

Companies almost always and inexplicably buy at high valuations!?! It's very easy. If Warren Buffett is hoarding cash - don't repurchase your shares!!! When he's buying so should you!