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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.
$Berkshire Hathaway-A(BRK.A.US$
$Berkshire Hathaway-B(BRK.B.US$
$Apple(AAPL.US$
$Alphabet-C(GOOG.US$
$Microsoft(MSFT.US$
$Netflix(NFLX.US$
$Tesla(TSLA.US$
$T-Mobile US(TMUS.US$
$Regeneron Pharmaceuticals(REGN.US$
$Oracle(ORCL.US$
$Cerner Corp(CERN.US$
$adidas AG(ADDYY.US$
- 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.
$Berkshire Hathaway-A(BRK.A.US$
$Berkshire Hathaway-B(BRK.B.US$
$Apple(AAPL.US$
$Alphabet-C(GOOG.US$
$Microsoft(MSFT.US$
$Netflix(NFLX.US$
$Tesla(TSLA.US$
$T-Mobile US(TMUS.US$
$Regeneron Pharmaceuticals(REGN.US$
$Oracle(ORCL.US$
$Cerner Corp(CERN.US$
$adidas AG(ADDYY.US$
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