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Showing posts from June, 2015

Ten Reasons Stock Buybacks Are The Tool of Lazy Management

Stock buybacks are all the rage. There is even an investing newsletter called Total Yield that adds dividends and stock repurchases and uses that measure as a key criterion for investment decisions. Despite its widespread popularity, I’m not crazy about stock buybacks. In fact, they are increasingly signs of dumb, lazy or incompetent management. Here’s why: 1.        They are frequently used as a palliative to offset bad news.   About to issue an earnings release with a sales decline and a miss to analyst estimates? Throw in a stock buyback to see if it will relieve some investor pain, or even better, moderate a certain stock price decline. 2.        It doesn’t return money to shareholders; it gives money to people who no longer want to be shareholders. Real believers in a company’s story want to hold the stock. Who sells into a buyback? People who no longer believe. 3.        It raise...