4 ms·
Basing your opinion of a CEO solely on stock prices, which can easily be inflated via things like buybacks, is perhaps a bit narrow minded. A company is more t
by na85 6y ago
Basing your opinion of a CEO solely on stock prices, which can easily be inflated via things like buybacks, is perhaps a bit narrow minded.
A company is more than its stock price.
- simonh 6y agoOk as a general point, but those criticisms simply do not apply to Cooke. The company has done absolute gang busters both in products and fundamental performance, and that's what has driven up the stock price.
- btilly 6y agoInflating your stock price by buybacks is easier said than done. In fact according to the CAPM economic model, it is impossible. The assets of the company decrease by the money spent on buybacks, which matches the value of stock bought and destroyed. This should leave the price per remaining stock unchanged.
- na85 6y agoSounds to me like the CAPM economic model is in need of revision. Buybacks are a common tool for increasing shareholder value and investor sentiment figures heavily in asset pricing.
- btilly 6y agoThere are a number of reasons why buybacks can increase prices. See https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-value-of-share-buybacks#:~:text=Research%20from%20both%20academics%20and,of%20the%20shares%2C%20see%20prices https://www.mckinsey.com/business-functions/strategy-and-cor... for a list. All are second order effects.