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Why We Do Not Think Much of Stock Buybacks

We do not include stock buybacks in our proprietary calculations. That's because it is too easy for company executives to "game" stock purchases. They may buy back stock just to support the price of their stock options, even though the stock is too expensive (at least by our proprietary metrics).

We would be more inclined to accept the stock repurchases of companies that did not have large stock options, but where management owned the stock outright. Then they are really trying to boost the price of the stock, long term. Otherwise, a dividend that must be maintained over time is a commitment. A stock buyback could be a "one night stand."