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Since a lot of CEOs don’t understand this I’ll explain/remind that buybacks create wealth for shareholders if stock is priced less than its intrinsic value and
by aczerepinski 4y ago
Since a lot of CEOs don’t understand this I’ll explain/remind that buybacks create wealth for shareholders if stock is priced less than its intrinsic value and destroy wealth if overpriced. If you aren’t sure what your company is worth you should under no circumstances do buybacks.
- ed 4y agoBuybacks are controversial but most folks agree that they do increase share price. You don't need to know the "true" intrinsic value of a company (which would require a crystal ball) as long as you reduce the number of outstanding shares. EPS increases, future dividends grow, etc. Whether it unfairly benefits large shareholders and those with performance packages, tied to share metrics, is an open question, however.