Share Buybacks

The big fad on Wall Street has been to buy back outstanding shares. I’m not a big fan of share repurchases. Personally, I’d rather get the cash. Too often, a company wastes good money on its own bad stock. As I see it, I pay corporate execs to run their businesses, not manage my money.
According to USA Today:

A record-breaking number of companies, 1,012, repurchased a record number of shares worth $456 billion last year, says TrimTabs. Buybacks for Standard & Poor’s 500 companies also hit a record at an estimated $315 billion.

Those are pretty impressive numbers. The share buybacks are starting to have a major effect on earnings. Fewer shares means higher earnings-per-share. The fourth-quarter earnings are expected to grow (or have grown) by 14.9%. This marks the 15th straight quarter of double-digit earnings growth.

Posted by on January 6th, 2006 at 11:58 am


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