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They aren't value neutral if you are spending money on buybacks instead of growing / keeping your factories in working order. See Abbott Labs spending 5 billio
by JaimeThompson 4y ago
They aren't value neutral if you are spending money on buybacks instead of growing / keeping your factories in working order.
See Abbott Labs spending 5 billion on buybacks instead of keeping their infant formula factories up to code.
- astrange 4y agoIt shouldn't have stopped them from maintenance though; they just didn't feel like doing maintenance. If a company wants to spend money on something they can always get a loan for it and consider issuing the shares out again later if needed. The problem with a share buyback is if you do it and then the share price falls again.
- gruez 4y ago>The problem with a share buyback is if you do it and then the share price falls again. how's that a problem? I get it might seem like you're back to square one if you did a buyback early this year, and the recent market crash brought the share price to before the buyback, but you still permanently: 1. paid out money to the shareholders who sold 2. increased the ownership stake of the remaining shareholders
- astrange 4y agoIf it falls again, it's not value neutral anymore - it's a transfer to whoever sold. So then the complaint that you could've used the money on maintenance against poisoning babies becomes true.