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I agree, but the greater fool theory and financial engineering (ie buybacks) will lead to greater profits for stockholders in the long run.
by AznHisoka 7y ago
I agree, but the greater fool theory and financial engineering (ie buybacks) will lead to greater profits for stockholders in the long run.
- whatshisface 7y agoBuybacks are closer to a one-time dividend than they are "financial engineering."
- qeternity 7y agoBuybacks are a more tax efficient vehicle for returning capital to shareholders.
- tomatocracy 7y agoThey're also arguably more cost-efficient if a large portion of investors would just take their dividend and use it to reinvest in the stock - the buyback means that group don't need to incur the friction costs of doing so.
- leedo__ 7y agoWhile this may be true, they seem to be largely funded by debt. Taking on debt and not using it for capital seems exceedingly risky in the face of a recession. And I gather this popular because of the tax implications of a dividend vs increase in stock price. I'm in favor of people paying taxes, so I'd prefer a dividend.
- qeternity 7y agoThis is an entirely different problem and not really true, except for the companies that do so to avoid repatriating foreign capital and incurring US tax rates.
- ls612 7y agoShould Google have paid a dividend in 2004? They made $150MM in profit in the 1st half of that year they definitely had the money to spare...