The Stock Buy Back Binge (04/01/2015)
This has been the real driver of the bull market.
From an article in Forbes:
The debate over whether it’s better for firms to send money to shareholders in the form of buybacks or in the form of dividends has gone on for decades. But we can all agree that companies ramping up their share repurchasing has buoyed stock prices. This chart from Bianco Research shows how buybacks have soared since the end of the recession and are now close to all-time highs:
You can view this trend as a good sign or a worrying one. On the one hand, companies should only buy their shares when they are confident that the stock has a lot of room to grow, as buying overpriced shares is a terrible use of shareholder money. But, as Will Becker, an analyst with Behind the Numbers, puts in his latest report to clients, history shows that executives and directors plan buybacks at the worst times.
For full article go here.
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