Share Repurchase - a Boon or a Bane?
Pros of stock buybacks for investors
- Boost in share prices
- Rising dividends
- Better earnings per share
- Less excess cash
- Positive psychology
Cons on stock buybacks for investors
- Poor predictions
- Sinking dividends
- Poor use of capital
- Management self-interest
- Cover for stock handouts
Are share buybacks good or bad?
As with many things in investing, the answer isn't well-defined. If the company genuinely has cash to spare, and its shares are arguably undervalued, then a buyback can be a good way to generate benefits for shareholders.
But if, its shares are expensive, it's worth asking why the company isn't choosing to pay a special dividend to its shareholders instead … or hanging on to the cash for a rainy day?
Generally, re-distributing wealth has been viewed positively by investors. This can come in the form of dividends, retained earnings and the popular buyback strategy.
I personally favour $Berkshire Hathaway-B (BRK.B.US)$ $Berkshire Hathaway-A (BRK.A.US)$. It appears to have bought back about $6.4 billion of its shares in 2021.
CEO Buffett has viewed stock buybacks as the best way to return capital to Berkshire shareholders and a better use of money than buying publicly traded stocks.
$Berkshire Hathaway-A (BRK.A.US)$
$Berkshire Hathaway-B (BRK.B.US)$
$Apple (AAPL.US)$
$Alphabet-C (GOOG.US)$
$Microsoft (MSFT.US)$
$Netflix (NFLX.US)$
$Tesla (TSLA.US)$
$T-Mobile US (TMUS.US)$
$Regeneron Pharmaceuticals (REGN.US)$
$Oracle (ORCL.US)$
$Cerner (CERN.US)$
$adidas AG (ADDYY.US)$
- Boost in share prices
- Rising dividends
- Better earnings per share
- Less excess cash
- Positive psychology
Cons on stock buybacks for investors
- Poor predictions
- Sinking dividends
- Poor use of capital
- Management self-interest
- Cover for stock handouts
Are share buybacks good or bad?
As with many things in investing, the answer isn't well-defined. If the company genuinely has cash to spare, and its shares are arguably undervalued, then a buyback can be a good way to generate benefits for shareholders.
But if, its shares are expensive, it's worth asking why the company isn't choosing to pay a special dividend to its shareholders instead … or hanging on to the cash for a rainy day?
Generally, re-distributing wealth has been viewed positively by investors. This can come in the form of dividends, retained earnings and the popular buyback strategy.
I personally favour $Berkshire Hathaway-B (BRK.B.US)$ $Berkshire Hathaway-A (BRK.A.US)$. It appears to have bought back about $6.4 billion of its shares in 2021.
CEO Buffett has viewed stock buybacks as the best way to return capital to Berkshire shareholders and a better use of money than buying publicly traded stocks.
$Berkshire Hathaway-A (BRK.A.US)$
$Berkshire Hathaway-B (BRK.B.US)$
$Apple (AAPL.US)$
$Alphabet-C (GOOG.US)$
$Microsoft (MSFT.US)$
$Netflix (NFLX.US)$
$Tesla (TSLA.US)$
$T-Mobile US (TMUS.US)$
$Regeneron Pharmaceuticals (REGN.US)$
$Oracle (ORCL.US)$
$Cerner (CERN.US)$
$adidas AG (ADDYY.US)$
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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HuatLady : An in-depth and sensible discussion of stock buyback. Global Giants like $Netflix (NFLX.US)$, $Apple (AAPL.US)$, $Microsoft (MSFT.US)$ are good recommendations.
HopeAlways : Balanced view on share buyback![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
Syuee OP HuatEver :![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
Syuee OP HuatLady : Thank you and Happy Trading!![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
Syuee OP HopeAlways : Thank you. Good luck and happy trading!![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
102793431 : Thanks for sharing this!
KT88 : Never a dull perspective from you!
Syuee OP 102793431 : Hope the pointers are clear-cut and useful.![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
Syuee OP KT88 :
Zor101 : Good read. Thanks for sharing!
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