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Category: Stock Buybacks

This category includes articles that deal with the corporate practice of repurchasing outstanding equity, usually for the purpose of manipulating stock prices upwards and often associated with the exercise of stock options by corporate executives.

Securities fraud

Stock buybacks and dividend equivalency

Come, Watson!  ... The game is afoot.

A basic principle of US security law is that material misstatements and omissions of fact in connection with the purchase and sale of any security are violations to be sanctioned.

Corporations have argued that stock buybacks are equivalent to dividends. This article explains why this is not true and why suggesting buyback-dividend equivalency may constitute fraud.

Stock buybacks

Litigation threat for executive options?

If you run the beast will catch you; if you stop the beast will eat you ...

Trial lawyers are showing interest in the apparent conflict of interest when insiders use stockholders’ money to buy back shares on the theory that they are undervalued, and at the same time are unloading their own shares.

Legal action in this direction could threaten the equity market, given the importance of stock buybacks in keeping prices up.

If stock buybacks were to cease, for any reason, the market could crash, which might wake the SEC from its slumbers.

Q2 2006

Stock buybacks continue at record levels

Reckless corporate behavior continues ...

Net share repurchases by nonfinancial nonfarm corporations ran at an annual rate of $554.8 billion, about the same level as in Q1 2006 and more than ten times the level of 2001 and five times the level of 2000, the peak of the Great Bubble. Amounts paid to exiting shareholders (including holders of executive options and short sellers) exceeded amounts paid equitably to all shareholders as regular dividends by 44%.

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Featured articles on inside pages

Stock buybacks

Stock buybacks, refusing to die, live on

In Q1 2009, stock buybacks came back, driving up equity prices and sparking a rally by dominating a thin market. These equity repurchases were financed from depreciation and bond issues. More ...

Securities Analysis

Crowd sourcing investment research

Free, easily available investment information is largely unexploited. This is because there is too much of it. Information, to be useful, must be processed. This processing has a time cost. This article describes how new technology allows securities research to evolve beyond the industrial techniques of the 20th century.
More ...

US Politics

Why Congress won't kill ACORN

Closely connected with President Obama, the ACORN group of "community organizers" has drawn censure from the Democrat-controlled Congress as a result of investigative reporting by James O'Keefe and Hannah Giles. More ...

US equities

Stock values and cash dividends wither

Wall Street ballyhoo and flim-flam to the contrary, the year 2005 closed-out half a decade of misery and pain for the average investor in US equities. Average cash dividend yields never surpassed 3.8% during the period, and most of this was consumed by taxes and management expenses of the open-end mutual funds. More ...

US Bonds

The collapse of the dollar and US bonds?

The extreme spending of the Obama government, combined with irresponsible bank lending policies promoted by Barney Frank and Chris Dodd, portend rising interest rates, the collapse of the bond market, and the end of dollar supremacy. More ...

World Economy

What Is ‘International Liquidity’?

It used to be that the term 'international liquidity' meant the relative amount of resources available to a nation's monetary authorities that could be used to settle a balance of payments deficit. In the days of the gold standard, this would mean access to gold that could be used to redeem a nation's currency held by foreigners. More ...

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2010-10-28 15:43