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| Subject: Stock Buybacks In some countries, including the United States and the United Kingdom, corporations can buy back their own stock in a share repurchase, also known as a stock repurchase or share buyback. There has been a meteoric rise in the use of share repurchases in the U.S. in the past twenty years, from $5b in 1980 to $349b in 2005. A share repurchase distributes cash to existing shareholders in exchange for a fraction of the firm’s outstanding equity. That is, cash is exchanged for a reduction in the number of shares outstanding. The firm either retires the shares or keeps them as treasury stock, available for re-issuance. Under U.S. corporate law there are five primary methods of stock repurchase: open market, private negotiations, repurchase put rights, and two variants of self-tender repurchase, a fixed price tender offer and a Dutch auction. (Wikipedia Feb 2010) As goes January? By John Schroy, on February 26th, 2010 |  Leave a comment  Foreign investors and mutual fund shareholders were the primary buyers behind the Bear Market Recovery of 2009. Stock buybacks had disappeared, a significant modification in investor/issuer behavior that had been seen since 1982 and SEC Rule 10b-18. The rally hit a peak in January 2010, reminding many of the saying, “As goes January, so goes the year”. February 26th, 2010 | Print Article |  Email Article |  Topics: Baby Boomers, Ben Bernanke, Corporate Governance, dividends, Dow Jones, executive stock options, hedge funds, Inflation, insurance company, Leverage, mutual funds, SEC Rule 10b-18, Stock Buybacks, US SEC | Category: US Equities | Leave a comment |  Short urlA suckers rally? By John Schroy, on July 24th, 2009 | One comment  FASB Rule 123 vastly understates the real cost of stock options. The accounting for massive stock buyback/option programs by issuers of traded securities over the last generation may be in accordance with GAAP, but is likely to have severely distorted the P&L statements of hundreds of companies. With this in mind, claims that ‘better numbers’ have driven the stock market in Q2 2009 deserve a healthy dose of skepticism. July 24th, 2009 | Print Article | Email Article | Topics: Binomial model, Black-Scholes model, Corporate Governance, FASB Rule 123, Stock Buybacks, US SEC | Category: US Equities | One comment | Short urlNew research: By John Schroy, on July 15th, 2009 | Leave a comment  A new research study by M.A. Gumport, published on the Social Sciences Research Network, shows that stock buybacks are not as good for investors as often touted. The report suggests that when dividends are favored over capital gains, the interests of long-term investors are better served. This is added evidence that stock buybacks are undesirable corporate behavior, despite the favorable opinion of many on Wall Street. July 15th, 2009 | Print Article | Email Article | Topics: Corporate Governance, dividends, SEC Rule 10b-18, Stock Buybacks, US SEC, US taxation | Category: Stock Buybacks | Leave a comment | Short urlFeatured articles on inside pages
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