3 ms·
If a company is investing in non-synergistic assets with excess cash, why not just instead convert that cash to shareholder profits?
by zucker42 6y ago
If a company is investing in non-synergistic assets with excess cash, why not just instead convert that cash to shareholder profits?
- gxon 6y agoTax advantage? If you pay out a dividend, you force your shareholders to pay income tax rates. But, if you can use company profits in a way that pumps the stock valuation, your shareholders can effectively take the same profits with long term cap gains tax. My understanding is that a stock buyback is basically this strategy, and MicroStrategy's CEO has said that he also considered that. MSTR is up ~100% since they first bought bitcoin. This is at least, my amateur understanding that could be wrong.