Investors love stock buybacks, but they don't always spur the types of returns one might imagine.

Buybacks, on their own, increase the value of each share. Repurchases reduce the number of shares outstanding. Keeping earnings constant, earnings per share goes up, supporting gains in the price per share. Buybacks also signal the confidence a company has in using profits and balance-sheet cash to finance these purchases.

But buybacks don't always spark the type of stock-price gains investors hope for.

Arguably, some companies such as Meta use buybacks as a way of neutralizing the negative price effect of issuing shares. The deal to the market is that the company will conserve cash by paying employees partially in stock, and later on, it will buy back stock to soften the negative impact of the higher share count. Those companies are effectively using repurchases to "sterilize" the negative impact of share issuance, Pavilion noted.

The point is that investors looking for companies executing buybacks should look for those that are net buyers of their own shares by large margins.

Buybacks are generally good when they're done by companies issuing far fewer shares to employees.