Shidafzan: Financial Management (Chapter 12: Analyzing Project Cash Flows)
One is that there is firms may buy back the boutique ahead of positive information announcements, and those investors who tender their shares in the buy back will lose out to those who do not. GM – We are a good employer and there is very little union involvement. There are a couple of interpretations. There are two other issues brought up by critics of stock buybacks. In my last two posts, I considered how earnings reports can generate narrative shifts or changes, thus affecting value, and pricing effects, when companies trail or beat investors’ estimates on metrics (earnings per share, revenues, user numbers etc.). Note that while stock prices have ranged from $45 to close to $100 over this period, my value estimates have had a much tighter range, reflecting my largely unchanged story line for the company, over the period. Barring the one scenario where companies that buy back stock stop making value-destructive investments, almost every other positive story about buybacks is one about value transfers: from taxpayers to equity investors (when debt is used by an under levered firm to finance buybacks) and from one set of stockholders to another (when a company buys back under valued stock).
After making clear her intentions to continue with quantitative easing (QE) and keep rates low, she also provided her thoughts on whether the Fed’s policies were creating a market bubble. I think that both ends of the spectrum on buybacks are making too much of a simple cash-return phenomenon. In other words, much of the cash paid out by Exxon Mobil, Cisco and 3M was reinvested back into Tesla, Facebook and Netflix, a testimonial to the creative destruction that characterizes a healthy, capitalist economy. I was pretty mad at myself because I shouldn’t go shopping as WE shot up to a high of 0.099. I could and would have exited at a much more better price than 0.079. Well, still I cannot complain as it’s free money from SGX. In my view, it is poor corporate governance practice on the part of boards of directors to grant huge option packages to managers and then vote for buybacks designed to make managers even better off.