[CoachKandSportsguy]

Buybacks

good or bad? it depends. . .

Extremely bad example: BBBY, (Bed Bath and Beyond) authorize a HUGE buyback, and were executing on it, and now they are out of cash, and vendors have stopped some shipments. That may be the sole reason for a bankruptcy filing in the near future.

There are two primary uses of stock buybacks:
To fund executive pay with restricted stock units or for option incentive packages exercises,
and second, to assist in executive compensation plans where there is an earnings per share (EPS) compensation metric. Tyco CEO who went to the pokey increased his EPS through acquisitions of other companies, so as the old saying goes: want to understand the company behavior is to review the compensation plans, as you get what you pay for.

The first takes shareholder's cash and gives it directly to insiders. . I have benefited from these plans, but on a very small scale in the old days, the late 90's.
The second helps ensure that executives make their compensation plan. However, if the purchased shares stay in the treasury, then there is some shareholder benefit for a higher earnings per share, making the company slightly more valuable. Many executives siphon cash off and there are several egregious examples, such as a previous CEO of Boeing.

So at the end of the day, the effectiveness depends upon the net share change, although even the second really is financial engineering for insider pay. So when you hear analysts talk about only the share repurchase from a lack of other investment theory, you are listening to someone covering for the CEO's incentive plans. . . and being paid for it most likely.

The key to offsetting this is the proxy vote to approve the ceo and others' pay packages. if I recall, Jamie Dimon's of JPM most recent pay plan was vetoed. However, reading all the fine print and going over the 10K and 10Qs and proxy statements should give you a good idea of which companies are egregious. And if you study a bit of CEO history, Jack Welsh was the leader in giving egregious pay packages at GE, which justified his own pay package. . . I have worked with JW wannabes from the GE days, and I totally dislike their lack of big picture focus, and their standard headcount reduction strategies. .. headcount turnover strategies. don't ask if you don't want to know

and yeah, I have an MBA as well, but also have experience with the compensation plans from an insider point of view. And I have seen colleagues with $M options and stock plans not get anything or sometimes get about 50% of the high value due to stock market selloffs.

So ignore the theory of corporate bull****, and assume its legal insider greed.

And if you watch "The Big Short, and read the book, you will understand why some people are radicalized against corporatism, and will be silenced by the paid off shills, especially when the executives bankrupt the company and employees lose their jobs.

future former finance guy