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Buybacks are just distributions that give shareholders the option of taking the money or having the company reinvest it for them. If you think you can get bette
by colinmhayes 4y ago
Buybacks are just distributions that give shareholders the option of taking the money or having the company reinvest it for them. If you think you can get better returns elsewhere take the distribution. If you don't let the company reinvest.
- adam_arthur 4y agoBuybacks are not distributions. They give you an increased ownership percentage. If the company goes bankrupt you never got any benefit from the buyback. The return of the buyback is only known at the time you sell your shares, because the earnings yield and valuation of the company are dynamic, and buybacks defer the gain until time of sale. A company buying back at low ROI is not equivalent to paying out dividends from cash flow Don't know how to make it any clearer, seems you're using layman's knowledge and fundamentally misunderstand the mechanisms here
- colinmhayes 4y ago> If the company goes bankrupt you never got any benefit from the buyback. Only if you choose not to take the distribution. If you do then you're out and the company going bankrupt means nothing.