Share Buybacks

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DenisD
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Share Buybacks

Post by DenisD » 05 Oct 2005 00:37

Just finished the autumn refresh of my Canadian large-cap screen. One of the inputs to the screen is the % of shares bought back over the previous year. I thought some of you would be interested in who's buying back shares.

The table below shows the % reduction in shares outstanding for the two previous six-month periods for 53 selected companies. I copied the shares outstanding from the Sep04 and Mar05 issues of TSX e-Review magazine. The 30Sep05 numbers are from www.TSX.com

If companies have multiple share classes, I either added the numbers together (CU, MG, TPX) or weighted the classes by the trading price (CTR, T, TEK). Some classes appear to be unlisted. In that case, I either copied the additional number of shares from the quarterly report (EPM, IQW, POW) or just used the one class listed (BNN, FAL, IIC, MRU).

Suggestions/corrections are appreciated.

Code: Select all

Symbol  Name                          Sep/05  Mar/05
CM      CIBC                             4.1     0.7
IPS     IPSCO Inc.                       3.9    -2.4
ECA     EnCana Corp.                     3.8     3.4
POT     Potash Corp. of Saskatchewan     3.4    -2.9
IMO     Imperial Oil                     3.1     1.6
CNR     Canadian National Railway        2.7     1.8
NA      National Bank of Canada          1.9    -0.1
T       TELUS                            1.5    -1.7
NCX     Nova Chemicals Corp              1.4     4.6
SLF     Sun Life Financial Inc.          1.4     1.2
IQW     Quebecor World                   1.4    -0.1
MFC     Manulife Financial               1.3     0.6
TLM     Talisman Energy                  1.1     3.3
BNS     Bank of Nova Scotia              1.0     0.3
CP      Canadian Pacific Railway         0.6    -0.1
PCA     Petro-Canada                     0.5     2.1
TOC     Thomson Corporation              0.3    -0.1
L       Loblaw Companies                 0.1     0.0
BMO     Bank of Montreal                 0.1    -0.2
SBY     Sobeys Inc.                      0.0     0.9
SHC     Shell Canada                     0.0     0.1
GWO     Great-West Lifeco                0.0     0.0
PWF     Power Financial Corp.            0.0     0.0
WN      George Weston Ltd.               0.0    -0.1
CU      Canadian Utilities               0.0    -0.2
FTT     Finning International            0.0   -13.3
IIC     ING Canada                       0.0
HSE     Husky Energy                    -0.1     0.0
CNQ     Canadian Natural Resources      -0.1    -0.1
BCE     BCE Inc.                        -0.1    -0.1
AL      Alcan Inc.                      -0.1    -0.4
SCC     Sears Canada                    -0.3     0.4
TRP     TransCanada Corp.               -0.3    -0.2
DFS     Dofasco Inc.                    -0.3    -0.3
RY      Royal Bank of Canada            -0.4     0.8
SU      Suncor Energy                   -0.4    -0.5
NXY     Nexen                           -0.4    -0.7
EMP     Empire Company                  -0.5     0.0
SAP     Saputo Inc.                     -0.5    -0.2
POW     Power Corp of Canada            -0.5    -0.5
ENB     Enbridge                        -0.6    -0.3
TEK     Teck Cominco Ltd.               -0.6    -4.7
SC      Shoppers Drug Mart              -0.7    -0.8
BNN     Brascan Corp.                   -0.8    -0.3
TD      TD Bank                         -0.8    -7.6
N       Inco Ltd.                       -0.9    -1.2
TA      TransAlta Corp.                 -1.2    -1.1
CTR     Canadian Tire Corporation       -1.4     0.3
AGU     Agrium                          -1.5    -0.3
TPX     Molson Coors Canada             -1.9
MG      Magna International             -2.5    -9.9
MRU     Metro Inc.                     -19.2     1.2
FAL     Falconbridge

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Post by Small Investor Activist » 05 Oct 2005 23:57

Stock buybacks are a sham used by large shareholders who need liquidity. They raid corporate treasuries. Often companies buyback their stock at inflated prices. They usually have little upward effect on the stock price.

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Post by nadreck » 06 Oct 2005 09:18

Small Investor Activist wrote:Stock buybacks are a sham used by large shareholders who need liquidity. They raid corporate treasuries. Often companies buyback their stock at inflated prices. They usually have little upward effect on the stock price.
As long as a share buy back is producing more return for shareholders than they would see by the company reinvesting those funds in their business and more return than they would see if they were paid as dividends (remember that dividends attract some tax in the shareholders hands and share buy backs don't) then the shareholder is getting a net benefit with the share buyback.

In certain cases share buy backs can be accomplished at prices below book value. In this case they in fact increase book value per share. Most of the time they are above book value, so from a book value perspective they are reducing the amount of book value per share. However, when ever you have people investing in a company and buying shares at a price above book value, it is because they see at least as much higher a cumulative return on equity as equivalent investments they could by at book value.

For example if you have a company with a 40% return on equity it might trade at 10 times book value, but say over time it has accumulated cash and has 50% of its book value in cash but has dropped to trading at 6 times book value because its return on equity has dropped to 22% as it only gets 4% return on its cash. If this company gives out all of its cash as dividends then the shareholders as a group get 1/12th their share price in dividend, pay tax on it, and while ROE goes back to 40% each share holder is receiving the same share of the ROE going forward so earnings per share has dropped slightly as they are no longer earning interest on these funds. If instead the company buys back shares with this money it can buy back 1/12 of the outsanding shares then the amount of earnings per share goes up by 1/12th as does the future less the 1/50th of interest costs. Over the long run this action is better for the shareholders presuming that there was no better way to invest the money in expanding the operations of the business and presuming that the dividends are indeed taxed in the hands of the shareholders.
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Post by DenisD » 06 Oct 2005 19:20

Small Investor Activist wrote:They usually have little upward effect on the stock price.
Any evidence for this assertion? :?

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Post by bender » 06 Oct 2005 20:25

Nadreck - thanks for the helpful explanation above.

On a simpler level, I am concerned about share buybacks as standard operating procedure. If one values a stock price based on the future dividend stream, then share buybacks constantly push potential dividends into the future. Businesses don't last forever, and these dividends may never materialize. I guess thats why we discount future returns.

A darker driver of buybacks may be to mop up dilution by employee options.

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Public Being Fleeced

Post by Small Investor Activist » 06 Oct 2005 21:17

Another scam is companies use buybacks to meet earnings estimates.

The opposite can be true, buybacks are a sign of trouble rather than success. Companies under pressure from hedge funds and other large shareholders buyback stock to give them liquidity.

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Post by Small Investor Activist » 06 Oct 2005 21:40

DenisD wrote:Any evidence for this assertion? :?
Companies in the S&P500 trade at a multiple above 20p/e. The majority buyback their stock. Would you buy a business that took you 20 years or more to earn your money back.

Stock buybacks are one of the greatest stock market rip-offs of all time, where corporate funds are taken from the public and used to buy less valuable paper from dominant shareholders.

I just read Cognos which is trading at 24p/e is buying back their stock. There isn't an experienced manager in the world who would pay that kind of dough for a business unless it was for a fund sold to the public where fees are generated. Costco with barebone margins is buying back their stock. Are they freakin nuts, the grocery business is crappy enough as it is, if they get squeezed they're out of business. Companies like that should maintain a reserve fund for emergencies instead of buying out favoured shareholders.

It seems like a conflict of interest for a company to buyback its stock.

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Post by DenisD » 06 Oct 2005 23:20

Small Investor Activist wrote:They usually have little upward effect on the stock price.
Haven't seen any evidence yet. :( What I was hoping for was an academic study showing that, as companies buy back more shares, their returns over subsequent periods decrease. And returns for companies which buy back the most shares decrease the most. Ideally, the study should span 20 or more years.

I'm sure the abuses you noted exist. But what is the average effect?

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Post by CalgaryGuy » 07 Oct 2005 00:15

DenisD wrote:
Small Investor Activist wrote:They usually have little upward effect on the stock price.
Haven't seen any evidence yet. :( What I was hoping for was an academic study showing that, as companies buy back more shares, their returns over subsequent periods decrease. And returns for companies which buy back the most shares decrease the most. Ideally, the study should span 20 or more years.

I'm sure the abuses you noted exist. But what is the average effect?
go to http://scholar.google.com/

search for : share repurchases performance.

A quick glance indicates that stock repurchases cause above average returns for value stocks, but no real effect for growth. I only read the abstracts, but they all seemed to point in that direction. One paper explained this by saying it prevented the managers from blowing the money on empire building. I guess a dividend would do that as well. I don't see anything wrong with buybacks, I think they are just another way to return money to shareholders. I include the abstract of one of the papers below.

Market underreaction to open market share repurchases
journal Journal of Financial Economics.

Volume (Year): 39 (1995)
Issue (Month): 2-3 ()
Pages: 181-208

We examine long-run firm performance following open market share repurchase announcements, 1980–1990. We find that the average abnormal four-year buy-and-hold return measured after the initial announcement is 12.1%. For ‘value’ stocks, companies more likely to be repurchasing shares because of undervaluation, the average abnormal return is 45.3%. For repurchases announced by ‘glamour’ stocks, where undervaluation is less likely to be an important motive, no positive drift in abnormal returns is observed. Thus, at least with respect to value stocks, the market errs in its initial response and appears to ignore much of the information conveyed through repurchase announcements.

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Post by Small Investor Activist » 11 Oct 2005 10:50

Perhaps share buybacks are a form of tax evasion and since it could be seen as a conflict for a company to prop up its own stock maybe the securities act should be revised limiting this practice. Maybe stock buybacks aren't so efficient, they create a capital gain for investors who tender, although this may prove tax exempt investors like pension funds are favoured. If CEOs are concerned about taxes why don't they just keep the cash in the company and invest it wisely instead of moving offshore where a crackdown is inevitable.

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Post by DenisD » 08 Mar 2006 01:21

What firms do vs. what they say by Mark Hulbert. May require login.
Ford Equity Research of San Diego, which publishes a newsletter called the Ford Equity Research Investment Review, recently completed a major study of buyback strategies that are based on actual changes in the quantity of firms' outstanding shares. Their findings suggest that it behooves investors to pay close attention to what companies are doing with their share quantities, not just to what they are saying.

Ford Equity Research constructed five portfolios according to changes in companies' outstanding shares over the trailing 12 months. The first portfolio contained all companies whose share quantities declined by at least 5%, while the fifth portfolio contained those whose quantity increased by at least 5%. The other three portfolios contained the stocks of companies whose share quantities grew or fell by less than these amounts.

The Ford study covered the 10n-year period from the beginning of 1996 through the end of last year. Over this period, the Dow Jones Wilshire 5000 index produced a 9.1% annualized return and the average return of the several thousand stocks in Ford's database was 15.1% annualized.

...

The portfolio containing stocks with the biggest declines in share quantities produced the highest return of any of the portfolios, as one would expect. It gained 23.6% annualized over the 10-year period, 8.5 annualized percentage points higher than the average stock in Ford's database and 14.5 annualized percentage points higher than the Dow Jones Wilshire 5000.

In contrast, the fifth portfolio, the one containing stocks of those companies whose share quantities grew by at least 5%, produced a 6.6% annualized return over this same 10-year period. That's 17 annualized percentage points less than what the first portfolio produced.
Added: Reference to Ford's database which gained 15.1% annualized over the 10 years. ISTR Ford's database contains stocks which they believe will give superior returns.

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Post by DenisD » 03 Apr 2006 00:10

I'll be doing the spring refresh of my Canadian large-cap screen tomorrow. One of the inputs to the screen is the % of shares bought back over the previous year. I thought some of you would be interested in who's buying back shares.

The table below shows the % reduction in shares outstanding for the two previous six-month periods for the selected companies. I copied the shares outstanding from the Mar05 and Sep05 issues of TSX e-Review magazine. The 31Mar06 numbers are from www.TSX.com

If companies have multiple share classes, I either added the numbers together or weighted the classes by the trading price. Some classes appear to be unlisted. In that case, I either copied the additional number of shares from the quarterly report or just used the one class listed.

Suggestions/corrections are appreciated.

Code: Select all

Symbol     Name                           Mar/06  Sep/05
POT-T      Potash Corp. of Saskatchewan      3.6     3.4
IMO-T      Imperial Oil                      2.3     3.1
CNR-T      Canadian National Railway         2.1     2.7
AGU-T      Agrium                            2.1    -1.5
T-T        TELUS                             1.7     1.5
OCX.SV-T   Onex Corporation                  1.3     0.0
BAM.LV.A-T Brookfield Asset Management       1.3    -0.8
PCA-T      Petro-Canada                      1.2     0.5
TOC-T      Thomson Corporation               1.0     0.3
NA-T       National Bank of Canada           0.8     1.9
CTR.NV-T   Canadian Tire Corporation         0.8    -1.4
BNS-T      Bank of Nova Scotia               0.7     1.0
SAP-T      Saputo Inc.                       0.7    -0.5
RY-T       Royal Bank of Canada              0.6    -0.4
MFC-T      Manulife Financial                0.5     1.3
SLF-T      Sun Life Financial Inc.           0.4     1.4
TLM-T      Talisman Energy                   0.3     1.1
ECA-T      EnCana Corp.                      0.2     3.8
L-T        Loblaw Companies                  0.0     0.1
CU.NV-T    Canadian Utilities                0.0     0.0
FTT-T      Finning International             0.0     0.0
WN-T       George Weston Ltd.                0.0     0.0
GWO-T      Great-West Lifeco                 0.0     0.0
IGM-T      IGM Financial                     0.0     0.0
IIC.LV-T   ING Canada                        0.0     0.0
PWF-T      Power Financial Corp.             0.0     0.0
SHC-T      Shell Canada                      0.0     0.0
ATD.SV.B-T Alimentation Couche-Tard          0.0    -0.1
BCE-T      BCE Inc.                          0.0    -0.1
CNQ-T      Canadian Natural Resources        0.0    -0.1
HSE-T      Husky Energy                      0.0    -0.1
EMP.NV.A-T Empire Company                    0.0    -0.5
TPX.NV-T   Molson Coors Canada               0.0    -1.9
GNA-T      Gerdau AmeriSteel                -0.1    -0.1
TRP-T      TransCanada Corp.                -0.1    -0.3
MG.SV.A-T  Magna International              -0.1    -2.5
MRU.SV.A-T Metro Inc.                       -0.1   -19.2
IQW.SV-T   Quebecor World                   -0.2     1.4
NCX-T      Nova Chemicals Corp              -0.2     1.4
SBY-T      Sobeys Inc.                      -0.2     0.0
SC-T       Shoppers Drug Mart               -0.2    -0.7
CM-T       CIBC                             -0.3     4.1
NXY-T      Nexen                            -0.3    -0.4
SU-T       Suncor Energy                    -0.3    -0.4
POW.SV-T   Power Corp of Canada             -0.3    -0.5
ENB-T      Enbridge                         -0.3    -0.6
IPS-T      IPSCO Inc.                       -0.4     3.9
BMO-T      Bank of Montreal                 -0.4     0.1
TEK.SV.B-T Teck Cominco Ltd.                -0.4    -0.6
CP-T       Canadian Pacific Railway         -0.6     0.6
AL-T       Alcan Inc.                       -0.9    -0.1
TD-T       TD Bank                          -0.9    -0.8
FAL.LV-T   Falconbridge                     -0.9
TA-T       TransAlta Corp.                  -1.0    -1.2
N-T        Inco Ltd.                        -1.9    -0.9
IAG-T      Industrial Alliance Ins & Fin    -2.4    -0.2

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Post by jackstraw » 05 Apr 2006 17:59

DenisD is looking for a study of stock prices following share buybacks that proves something. Since stock prices can be 'incorrect' for long period of time, the stock price will not 'prove' the correctness of a management decision... It will only reflect compliance with the current fashion.

Remember when teck companies were told to maximize their sales, and ignore profits? Management did what the market (wrongly) wanted. And the companies went bust, and the investors lost their shirtsl.

I agree with nadreck. Since we are talking about different opportunities, they must be analysed financially, not by the market. A similar methodology with a bit of a different slant is found at " Investment Truths #8" http://members.shaw.ca/RetailInvestor/truths.html

And the way to incorporate the situation into your valuation model with Comprehensive Earnings #7 is found at : http://members.shaw.ca/RetailInvestor/earnings.html

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Post by DenisD » 05 Apr 2006 18:50

jackstraw wrote:DenisD is looking for a study of stock prices following share buybacks that proves something.
I'm not looking for proof, merely strong plausibility. :wink:

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Post by yielder » 05 Apr 2006 20:15

DenisD wrote:Suggestions/corrections are appreciated.
Check to see what they've been doing with options to management & what exercising of options has been occuring over the period of the buyback. Buybacks can offset the dilution effect of large numbers of options being exercised.

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Post by jackstraw » 06 Apr 2006 13:26

Buybacks can offset the dilution effect of large numbers of options being exercised.
I couldn't disagree more. The two transactions serve to HIDE any change to the number of shares outstanding. You just proved how successful this financial manipulation is.

They are both a cost to the other owners. Please confirm this for yourself by reconsiling the book value per share from the beginning of the year to the end. This is not a issue of personal opinion.
http://members.shaw.ca/RetailInvestor/earnings.html

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Post by TheElegantInvestor » 06 Apr 2006 14:51

From my point of view, the motivation behing a buyback is often related to the bonus system of senior managers. If the bonus system is based on somekind of profitability per share growth, then a buyback is the preferred avenue (assuming you cannot achieve the same thing by doing growth capex or acquisitions). If the bonus is more aligned with profitability growth (not per share) or worse, revenue growth, money will be used for acquisitions (potential even less then optimal acquisitions).

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Post by DenisD » 06 Apr 2006 16:15

Do Firms Knowingly Repurchase Stock for Good Reason? Aug/01 30 page PDF
We reconsider the empirical evidence following repurchase announcements by focusing on whether managers repurchase stock in a manner consistent with increasing shareholder value. Overall, the long-horizon return drift following repurchase announcements is higher when managers buy back stock compared to when they do not, a result consistent with the undervaluation hypothesis. We also see high abnormal performance for buyback firms with high free cash flow, although overall support for this hypothesis as a source of gain is mixed. Managers do not, however, utilize their informational advantage for personal gain.
Economic Sources of Gain in Stock Repurchases Jul/03 30 page PDF
This paper investigates three key economic motivations - mispricing, disgorgement of free cash flow and leverage - by evaluating cross-sectional differences in both the initial market reaction and long-run returns. The initial reaction provides some support for the mispricing story. However, subsequent earnings-related information shocks suggest that the initial market reaction is incomplete and that long-run performance may be informative. The long-horizon return evidence is most consistent with the mispricing hypothesis and, to some degree, the free cash flow hypothesis. We find little support for the leverage hypothesis.
David Ikenberry is mentioned in an article on buybacks in the latest Fortune mag.

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Post by DenisD » 06 Apr 2006 23:27

yielder wrote:Check to see what they've been doing with options to management & what exercising of options has been occuring over the period of the buyback.
The changes I've calculated are changes in shares outstanding. This includes changes due to buybacks, exercise of options, etc. The number of shares outstanding comes from TSX e-Review magazine and www.TSX.com. For each company with changes, the magazine lists the number of shares for each change type, the effective date and the input date. The input date is usually within a month of the effective date. But sometimes it's more.

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Post by yielder » 07 Apr 2006 09:14

jackstraw wrote:I couldn't disagree more. The two transactions serve to HIDE any change to the number of shares outstanding. You just proved how successful this financial manipulation is.
Bad wording on my part. I've commented before on buybacks and options. I suggested looking at options granted/exercised as part of the process of looking at buybacks. We're in agreement so I didn't prove anything. :wink:

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Post by Taggart » 30 May 2006 08:55

Why so sold on buybacks?

12:00 AM CDT on Tuesday, May 30, 2006

It must be nice to reap rich rewards just by being there.

Revenue at many U.S. companies has soared as the prices of the goods they hawk have risen in the open market. This top-line booster shot has helped push these companies' stocks up, in many cases to all-time highs.

That might make it seem an odd time to implement a share buyback program. Yet Standard & Poor's figures buybacks grew to a record $349 billion for the S&P 500 in a trend that's beginning to push up earnings.

One example from S&P analyst Howard Silverblatt: Irving-based Exxon Mobil Corp, which increased its earnings per share 12.3 percent in the first quarter as a result of the 4.6 percent share count reduction.

If you watch the headlines, which produce a continuous stream of buyback announcements, there's good reason to believe the programs will have an increasingly positive effect on companies' earnings.

Is buying overvalued stock the only thing companies can do with their cash?

I suppose, unless you find shareholder value in doing such things as expanding the company or paying dividends. (Buybacks grew 77 percent last year vs. 12 percent for dividends.)

Innovation, anyone?

Maybe executives should just sit on the cash until they're finally inspired by some old-fashioned innovation.

If it's really come down to enhancing earnings as much as possible with a minimal amount of work, why not let the Federal Reserve's unending campaign to raise interest rates lend a helping hand?

Mr. Silverblatt figures interest income will contribute nearly 4 percent to S&P 500 earnings this year, double what it did in 2004.

Seem like a bit of a severe assessment?

Buffett's disbelief

One of the most outspoken critics of executive pay has been Berkshire Hathaway chairman Warren Buffett. When one shareholder asked how he would design compensation schemes for executives in cyclical industries, here's what he had to say:

"If we owned a copper mining company, we would measure the cost of production, something over which management has control, not market prices."

Why, pray tell, should some mining executive in Whatevertown, U.S.A., reap rich rewards for copper prices going through the roof? It's not as if managerial acumen caused copper to spike. In that same vein, Mr. Buffett said he "would not pay the guy who was simply cashing in on $70 oil."

In all, Mr. Buffett figures half the companies out there have "unfair and egregious" compensation systems. Although you may think he's wrong or exaggerating, consider that the stock market stood still last year while executive pay rose unchecked.

The good news is some powerful U.S. shareholder activists have begun to wise up. More on that tomorrow.

link

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Post by kcowan » 30 May 2006 11:17

If dilution is bad for shareholders, then buybacks are good.

If high prices are driving profits up, then do both:
1) Invest in added capacity, and
2) Increase EPS through share buybacks.

But definitely revisit executive compensation! If everyone followed Buffet's lead, we could be assured that the right balance of the above two choices were being made.
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Post by arnyk » 30 May 2006 16:09

Executive compensation does have a tie-in with stock buybacks. A good chunk of their compensation may come from stock options. Those options don't pay dividends, so why use the cash to pay a dividend when you can prop up the share price by buying back stock? Keep buying them back, boost EPS, watch the share price rise, and then exercise them options.

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Post by Small Investor Activist » 30 May 2006 20:03

TheElegantInvestor wrote:From my point of view, the motivation behing a buyback is often related to the bonus system of senior managers. If the bonus system is based on somekind of profitability per share growth, then a buyback is the preferred avenue (assuming you cannot achieve the same thing by doing growth capex or acquisitions). If the bonus is more aligned with profitability growth (not per share) or worse, revenue growth, money will be used for acquisitions (potential even less then optimal acquisitions).
arnyk wrote:Executive compensation does have a tie-in with stock buybacks. A good chunk of their compensation may come from stock options. Those options don't pay dividends, so why use the cash to pay a dividend when you can prop up the share price by buying back stock? Keep buying them back, boost EPS, watch the share price rise, and then exercise them options.
Good points guys.

I've argued buybacks overpaying for stock are a sham. Now I believe there purpose often is tied into managements bonus pool as mentioned. If a certain eps is met, execs get a fatter bonus. Nowadays salaries are small compared to bonuses and options grants. What a racket. Something is fishy for sure.

I'm ticked off that they've been able to fleece the public for so long.

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Post by Gus » 31 May 2006 00:47

I haven't read every word in the thread or linked articles, but here's my semi-informed take on the issue...

The only valid reason I can see for a company buying back its own shares is if it thinks its main alternative, ie to invest in its own new growth projects, will return less than the weighted cost of the company's own capital. Thus, this should be a warning sign to investors that the company views its internal investment options in a dim light. I suppose you could argue that since the company is buying its own stock instead of, say, its competitors' stock (takeovers destroy value more often than not) then that is usually a good thing.

Other alternatives for disposing of excess cash might be paying down debt, holding on to it for a better investment environment or paying out an extraordinary dividend. I have heard senior executives justify share buy backs over dividends because of the tax advantages of passing the money to shareholders as capital gains; however, this has become a less valid reason now that dividend tax credits have been increased.

However, should we ask the question Cui Bono? it becomes fairly clear that senior executives, who typically own more options than they do shares, stand to benefit personally far more from a share buy-back than from an extraordinary dividend payment, since unexercised and unvested options don't gather dividends.

On the other hand, Warren Buffet's argument above that oil or copper company executives shouldn't get rewarded for rising commodity prices is all very well but doesn't reflect the real-world problem of retaining talented staff in a hot industry. And any incentive measures such as the one he suggests (cost control) are going to get gamed and will likely produce results that are not in the long-term interest of shareholders. In practice, stock options probably align management and shareholder objectives less badly than other incentive plans do.
Money ain't got no owners, just spenders. Omar Little

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