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If a widget company is pretty much dominating its total addressable market, any excess cash it has should be used to buy back its shares as a way of returning c
by hueving 8y ago
If a widget company is pretty much dominating its total addressable market, any excess cash it has should be used to buy back its shares as a way of returning cash to shareholders rather than try to expand into unrelated businesses.
The market (i.e. the shareholders getting the cash) is a better mechanism at finding new investments than the executive leadership at the widget company. As a widget company investor I invest in their widget making skills, not their skills in essentially starting new businesses.
- deleted 8y ago[deleted]
- RandomInteger4 8y agoWho do you think owns most of the stock? The executive leadership at these companies! They're giving themselves a bonus indirectly! That's the point of the buy backs!