jimsep

Why You Should Short Companies Doing Share Buybacks

No, you are not the only person to think that stock buybacks are a waste of time and a management diversion.

Some of the rude reactions to your article suggest the emotion and lack of clear thinking on this subject.

I would add to your thoughts that companies are no better than anyone else at figuring out when and at what price to buy back their own stocks. How many financial and housing companies are wishing to-day that they still had the cash they expended earlier, at higher prices? Many of them buy when they think prospects are good, only to suspend or cancel when things don't look as good. A good example is Home Depot which bought back lots of stock in the high thirties. How did that return cash to shareholders? The stock is struggling to maintain a price ten points lower.

Somebody should forward copies of the aricle to Jim Cramer who continues to babble that stock-buybacks are good, despite the many examples in this market cycle, that they are the perpetuation of a myth.