Seeking Alpha

Strubel Investment notes the horrid record of managements using cash for buybacks or M&A....

Strubel Investment notes the horrid record of managements using cash for buybacks or M&A. Buybacks are simple - companies tend to do them when the share price is high (JPMorgan a classic example: It suspended purchases after the CIO loss with the stock near $30, and will rev them up again next year in the 40's). The top tax rates for dividends would have to rise to 70-80% to make them less valuable than the alternatives.
Comments (4)
  • Seth Walters
    , contributor
    Comments (675) | Send Message
     
    Honestly, if a company doesn't know enough to buy low and sell high, do you really want to be in them anyway? The companies that are good at this have a nice tailwind there.
    7 Dec 2012, 06:19 PM Reply Like
  • Qniform
    , contributor
    Comments (2494) | Send Message
     
    What a great article.
    7 Dec 2012, 06:26 PM Reply Like
  • FleetUSA3226
    , contributor
    Comments (708) | Send Message
     
    I fault management for buying back when the market is high as in the graph. However, when the market plunges and uncertainty abounds as in the 2008-09 period I don't fault them for holding on to cash for awhile. They didn't know where the floor would be. Probably the best program would be dollar cost averaging which is what the biggies actually do (e.g. Exxon, COP).

     

    Nice article linked.

     

    Thanks.
    8 Dec 2012, 08:55 AM Reply Like
  • New Low Observer
    , contributor
    Comments (2054) | Send Message
     
    At least Intel is borrowing at low rates to buy back shares of stock that are at a 52-week low. Yeah, the price could decline further, but it is a break from the standard corporate mistake of buying high.

     

    Regards.
    9 Dec 2012, 01:58 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio:

|