4 ms·
This is robbery by the management class, and who can blame them. If I can take on debt at a corporate level and personally enrich myself, by increasing the val
by loourr 7y ago
This is robbery by the management class, and who can blame them.
If I can take on debt at a corporate level and personally enrich myself, by increasing the value of the stock through buybacks and then selling it, why wouldn't I?
This is all made a whole lot worse by stock option packages that give managers equity at major discounts.
I think we'll look back at this as the largest heists in history. Should serve as a good lesson to central bankers in creating wack incentive schemes (but it probably won't)
- Bostonian 7y agoIt's no such thing. As a shareholder I am happy for companies to buy back shares and thereby increase the value of the remaining shares.
- loourr 7y agoSure as a shareholder I also like stock buybacks. For instance, when Berkshire Hatheway does it, it's almost certainly a good thing. I don't think that's what we're seeing in the vast majority of cases though. I think what we're seeing is managers personally enriching themselves by taking on corporate debt and doing so in a very tax-advantaged way. Keep in mind they're not buying the stock they own in the first place, they're being given it via stock options at crazy discounts.
- dahdum 7y agoIf this were true, why aren’t we seeing an incredible surge of shareholder lawsuits? Those managers are ripping off all those long hedge funds and activist investors, and none of them are crying foul?
- sigstoat 7y ago> Keep in mind they're not buying the stock they own in the first place, they're being given it via stock options at crazy discounts. ...is your salary received from the company at a "crazy discount"? the equity is part of the agreed upon compensation for the manager's work. this is easily the most absurd statement on this entire page.
- dcolkitt 7y agoI don't exactly understand who you think is being "robbed" here. Shareholders? Because if that's the case there's little evidence of it. US equity returns have had one of the best decades in all of history. That certainly does not support the narrative that American shareholders are being ripped off on a systematic scale.
- jonny_eh 7y agoThe economy as a whole. All these companies are putting themselves at risk by taking on debt to do buybacks. As soon as there's a hiccup, this can lead to a cascading effect of bankruptcies, leading to a recession or depression.
- colinmhayes 7y agoBuybacks don't increase share value. The loss of assets used to purchase the shares cancels out the decreased shares.
- natalyarostova 7y agoIt's only a heist if no one else is as smart as you. If anyone is as smart as you, they would notice that stock buybacks are correlated with a future decrease in price, as the increasing price of the stock is due to manipulation (i.e. the current demand for the stock is not a function of an increase in expected future values, nor does it signal a change in population level discount factors). This is just your average outrage by people who don't know how to properly reason about financial markets.