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Only a company that is decrepit and unable to figure out how to invest in their own growth and improvement does buybacks. Actually investing is a far better for

Only a company that is decrepit and unable to figure out how to invest in their own growth and improvement does buybacks. Actually investing is a far better for long term shareholdes. Once company uses buybacks accessibly, you know the management doesn't have it.

nradov 3y ago
That is just completely wrong and displays ignorance of the basics of how capital markets work. Investors want to maximize their risk-adjusted rate of return. Even if a corporation still has some potential growth opportunities, investors may prefer to get their capital back so that they can invest in other more profitable ventures and they will exercise their votes accordingly. And if you're certain that "management doesn't have it" and can convince enough other investors to provide funding then you can take over the entire company and run it as you see fit. Activist investors like Pershing Square Capital Management do this all the time, and despite some high profile failures on average they are very successful. And there is fundamentally no major difference between paying dividends versus stock buybacks, just a matter of tax efficiency. It's sad to see people (who likely aren't even shareholders) complaining about buybacks without understanding that.
- panick21_ 3y ago
  If investors want to prefer to get capital back, they should sell stock. > just a matter of tax efficiency Yes, and that shouldn't be how it works. Its basically tax evasion. > It's sad to see people (who likely aren't even shareholders) complaining about buybacks without understanding that. Understanding it isn't the issue, its just different having different values.
- bitcharmer 3y ago
  > That is just completely wrong and displays ignorance of the basics of how capital markets work. Investors want to maximize their risk-adjusted rate of return. Even if a corporation still has some potential growth opportunities, investors may prefer to get their capital back so that they can invest in other more profitable ventures and they will exercise their votes accordingly. It's hilarious how you put these two sentences together completely ignoring the possibility of selling you shares on the open market if you "prefer to get your capital back". That's a real display of ignorance.
  - nradov 3y ago
    It's sad to see the level of aggressive ignorance on HN sometimes. Many investors prefer to have the capital returned through stock buybacks and/or dividends than sitting in a corporate treasury where it can potentially be squandered. The fact that investors can also sell their shares is irrelevant.

nradov 3y ago

That is just completely wrong and displays ignorance of the basics of how capital markets work. Investors want to maximize their risk-adjusted rate of return. Even if a corporation still has some potential growth opportunities, investors may prefer to get their capital back so that they can invest in other more profitable ventures and they will exercise their votes accordingly. And if you're certain that "management doesn't have it" and can convince enough other investors to provide funding then you can take over the entire company and run it as you see fit. Activist investors like Pershing Square Capital Management do this all the time, and despite some high profile failures on average they are very successful. And there is fundamentally no major difference between paying dividends versus stock buybacks, just a matter of tax efficiency. It's sad to see people (who likely aren't even shareholders) complaining about buybacks without understanding that.

panick21_ 3y ago
If investors want to prefer to get capital back, they should sell stock. > just a matter of tax efficiency Yes, and that shouldn't be how it works. Its basically tax evasion. > It's sad to see people (who likely aren't even shareholders) complaining about buybacks without understanding that. Understanding it isn't the issue, its just different having different values.
bitcharmer 3y ago
> That is just completely wrong and displays ignorance of the basics of how capital markets work. Investors want to maximize their risk-adjusted rate of return. Even if a corporation still has some potential growth opportunities, investors may prefer to get their capital back so that they can invest in other more profitable ventures and they will exercise their votes accordingly. It's hilarious how you put these two sentences together completely ignoring the possibility of selling you shares on the open market if you "prefer to get your capital back". That's a real display of ignorance.
- nradov 3y ago
  It's sad to see the level of aggressive ignorance on HN sometimes. Many investors prefer to have the capital returned through stock buybacks and/or dividends than sitting in a corporate treasury where it can potentially be squandered. The fact that investors can also sell their shares is irrelevant.