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Stock buybacks: consequences

Private-equity-buyback arbitrage

By John Schroy, on March 25th, 2007 | One comment
Values distorted by buybacks, finessed by going private.

The distortion in equity prices caused by the stock buyback movement since 1982, presents an opportunity for long-term arbitrage by private equity players.

By taking companies private, arbitrageurs can avoid the inconveniences of SEC oversight and the Sarbanes-Oxley Act, as well as the high costs of executive options supported by stock buybacks. This article discusses various ways the stock buyback movement might end.

March 25th, 2007 | Print Article | Email Article Email Article | Topics: | Category: Stock Buybacks | One comment | Short url

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