Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

Politicians And Twitter May Hate Buybacks. But Institutional Investors Don't.

FYI: When it comes to companies deploying capital, allocators say one of their top choices for management is to buy back shares, flying in the face of a recent Senate proposal to limit the practice.
Regards,
Ted
https://www.institutionalinvestor.com/article/b1d7h46qbdj7z4/Politicians-and-Twitter-May-Hate-Buybacks-But-Institutional-Investors-Don-t

Comments

  • "But pension funds, endowments, and other institutional investors represent the vast majority of public company shareholders—and, according to a recent study, these investors view buybacks as among the best actions management can take when it comes to allocating capital."

    I think this is a crock of crap. I contend Management uses this to line their nest.
  • I held PKW from early 2013 through mid 2017 when it started to lag , threw the funds into VOO. Have not been sorry.
  • Gary said:

    "But pension funds, endowments, and other institutional investors represent the vast majority of public company shareholders—and, according to a recent study, these investors view buybacks as among the best actions management can take when it comes to allocating capital."

    I think this is a crock of crap. I contend Management uses this to line their nest.

    Of course they do.
    For most of the 20th century, stock buybacks were deemed illegal because they were thought to be a form of stock market manipulation. But since 1982, when they were essentially legalized by the SEC, buybacks have become perhaps the most popular financial engineering tool in the C-Suite tool shed. And it’s obvious why Wall Street loves them: Buying back company stock can inflate a company’s share price and boost its earnings per share — metrics that often guide lucrative executive bonuses.
    https://www.forbes.com/sites/aalsin/2017/02/28/shareholders-should-be-required-to-vote-on-stock-buybacks

    Also: Are Stock Buybacks Starving the Economy?, The Atlantic (July 21, 2018)
    https://www.theatlantic.com/ideas/archive/2018/07/are-stock-buybacks-starving-the-economy/566387/
    In an exhaustive financial analysis of buybacks [see link below], the consultancy McKinsey found that companies would generally be better off issuing dividends or increasing investment instead. Buybacks also might distort earnings-per-share calculations and other measures of profitability and value.
    https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/how-share-repurchases-boost-earnings-without-improving-returns
  • @msf

    Lets Hear an Amen
Sign In or Register to comment.