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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 and dividend equivalency

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.
More ...

Securities Analysis

How inflation impacts EPS and PE ratios.

The Obama administration and Congress are laying foundations for high inflation. US equity investors should consider the effect of a rapidly devaluating currency on EPS and PE ratios. More ...

US Politics

America grows with legal immigration

Legal immigration has resulted in solid growth of the US population, despite declining birth rates and an increasing number of old people. This is good news for investors in stocks and real estate. Illegal immigration appears to be less than 5% of legal immigration, and legal immigration is at an all time high.
More ...

US equities

Do stocks offer protection against inflation?

There is a common belief that a managed, diversified portfolio of US common stocks provides protection against inflation. However, there is reason to question whether this protection currently exists.
More ...

US Bonds

Bond demand exceeds supply for a decade

Over the decade, 1995-2004, the demand for US bonds of all types has surpassed new bond issues in eight of the last ten years. This is the reason that bond prices have held firm, even in 2003, when net new issues reached almost $1.8 trillion. More ...

World Economy

Signs of US losing its groove?

Thirty years ago, US income from abroad was more than double the amount of income that the US paid to the rest of the world. This year, or the next, this foreign income surplus may disappear forever. Is the US 'losing its groove'? More ...

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