3 ms·
Stock buybacks per se are not bad. But when they come on top of: - cutting R&D and QA budgets - losing money year after year and amassing further debt and li
by epolanski 3y ago
Stock buybacks per se are not bad.
But when they come on top of:
- cutting R&D and QA budgets
- losing money year after year and amassing further debt and liabilities
- buying your own stock at market highs
they are just reckless.
At that point why don't just buy another's company stock instead of your insanely overvalued one. It's nonsense.
There's a reason why Buffett buys back Berkshire, but only if he finds the stock being undervalued. Otherwise it's not the best use of Berkshire money, it's just stupidity.
Please understand that buybacks are just one way to use money a company has and they are not always the best usage of money and they aren't even the best way to return money to shareholders (e.g. buying your own stock at market highs is a terrific way to burn equity as Meta has learned few years ago). It really can be nothing more than money burning.
- nradov 3y agoThere is no reliable way to determine whether a stock is overvalued or undervalued, so those are meaningless terms which apply only in hindsight. You are essentially claiming that Boards should be able to time the market, which is absurd and not actionable. As for R&D and QA budgets, what is the correct amount? There is no reliable evidence that Boeing's recent troubles are caused by any particular spending amount on those line items. From the outside the problems seem to stem from culture and lack of discipline than from spending levels. But the reality is that all of us here are just guessing and don't know what's really going on. And don't presume to condescendingly tell me what to understand. I understand stock buybacks perfectly well. In many cases they are the most tax efficient way to return capital to investors.
- deleted 3y ago[deleted]